<PAGE>
 
       Construction Loan Agreement dated January 1, 1995 by and between 
     Willows Concord Venture, A California Limited Partnership as Borrower,
       and New England Life Pension Properties II; A Real Estate Limited
                            Partnership as Lender.
<PAGE>
                                                         Willows Concord Venture


                                CLOSING AGENDA
                                --------------

          CONSTRUCTION LOAN FROM NEW ENGLAND LIFE PENSION PROPERTIES;
                      A REAL ESTATE LIMITED PARTNERSHIP,
                                      AND
                    NEW ENGLAND LIFE PENSION PROPERTIES II;
                 A REAL ESTATE LIMITED PARTNERSHIP, AS LENDER,
                                      TO
                     WILLOWS CONCORD VENTURE, AS BORROWER

DOCUMENT                                                        TAB NO.
--------                                                        ------

Construction Loan Agreement.........................................1

Promissory Note.....................................................2

Security Agreement..................................................3

Fifth Amendment to Loan Documents...................................4

First Amendment to Amended and
  Completely Restated Ground Lease..................................5
<PAGE>
 
                          CONSTRUCTION LOAN AGREEMENT


                                    between


                            WILLOWS CONCORD VENTURE,
                        A CALIFORNIA LIMITED PARTNERSHIP

                                          as Borrower,


                                      and


                      NEW ENGLAND LIFE PENSION PROPERTIES;
                     A REAL ESTATE LIMITED PARTNERSHIP, AND
                    NEW ENGLAND LIFE PENSION PROPERTIES II;
                       A REAL ESTATE LIMITED PARTNERSHIP

                                          as Lender,



                            Dated:  January 1, 1995


         Property Located In:  Concord, Contra Costa County, California
<PAGE>
 
                               TABLE OF CONTENTS
                               -----------------
<TABLE>
<CAPTION>
 
                                                                                                                Page
                                                                                                                ----
<S>          <C>                                                                                                <C> 
ARTICLE I.  DEFINITIONS.........................................................................................    1
              1.01  Defined Terms...............................................................................    1
                                                                                                                
ARTICLE II. LOAN ...............................................................................................    6
              2.01  Loan........................................................................................    6
              2.02  Loan Documents..............................................................................    6
              2.03  Effective Date..............................................................................    6
                                                                                                                
ARTICLE III. DISBURSEMENT.......................................................................................    6
              3.01  Conditions Precedent........................................................................    6
              3.02  Account.....................................................................................    7
              3.03  Disbursement Authorization..................................................................    7
              3.04  Borrower's Funds Account....................................................................    7
              3.05  Pledge and Assignment.......................................................................    7
              3.06  Disbursement................................................................................    7
              3.07  Disbursed Funds.............................................................................    9
                                                                                                                
ARTICLE IV. CONSTRUCTION........................................................................................   10
              4.01  Commencement and Completion.................................................................   10
              4.02  Force Majeure...............................................................................   10
              4.03  Construction................................................................................   10
              4.04  Americans With Disabilities Act Compliance..................................................   10
              4.05  Plans and Specifications....................................................................   11
              4.06  Construction Information; Inspections.......................................................   12
              4.07  Prohibited Contracts........................................................................   12
              4.08  Contractors.................................................................................   12
              4.09  Liens and Stop Notices......................................................................   12
              4.10  Construction Responsibilities...............................................................   13
              4.11  Improvement District........................................................................   13
              4.12  Delay.......................................................................................   13
              4.13  Bonds.......................................................................................   13
              4.14  Capital Expenditures and Reserves...........................................................   13
                                                                                                                
ARTICLE V. INSURANCE............................................................................................   14  
              5.01  Title Insurance.............................................................................   14
              5.02  Hazard Insurance............................................................................   14
              5.03  Flood Zone Notification.....................................................................   14
              5.04  Liability Insurance.........................................................................   14
              5.05  Blanket Coverage............................................................................   14
              5.06  General.....................................................................................   14
                                                                                                                
ARTICLE VI. REPRESENTATIONS AND WARRANTIES......................................................................   15
              6.01  Authority...................................................................................   15
</TABLE> 
                                      -i-
<PAGE>
 
<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>          <C>                                                                                                <C> 
              6.02  Formation and Organization                                                                  
                    Documents...................................................................................   15
              6.03  Enforceability..............................................................................   15
              6.04  No Violation................................................................................   15
              6.05  Financial Information.......................................................................   16
              6.06  Accuracy....................................................................................   16
              6.07  Adequacy of Loan............................................................................   16
              6.08  Taxes.......................................................................................   16
              6.09  Compliance..................................................................................   16
 
ARTICLE VII. DEFAULT............................................................................................   16
              7.01  Default.....................................................................................   16
              7.02  Acceleration................................................................................   18
              7.03  Disbursement by Lender......................................................................   18
              7.04  Lender's Completion of Construction.........................................................   19
              7.05  Cessation of Construction...................................................................   19
              7.06  Repayment of Funds Advanced.................................................................   19
              7.07  Right of Contest............................................................................   19
 
ARTICLE VIII.  HAZARDOUS MATERIALS..............................................................................   20
 
              8.01  Covenants...................................................................................   20
              8.02  Right of Contest............................................................................   20
              8.03  Indemnity...................................................................................   21
              8.04  Inspection by Lender........................................................................   21

ARTICLE IX. MISCELLANEOUS PROVISIONS............................................................................   21
              9.01  Expenses....................................................................................   21
              9.02  Indemnity...................................................................................   22
              9.03  Books and Records...........................................................................   22
              9.04  ERISA Compliance............................................................................   22
              9.05  Further Assurances..........................................................................   22
              9.06  Form of Documents...........................................................................   23
              9.07  No Third Parties Benefited..................................................................   23
              9.08  Notices.....................................................................................   23
              9.09  Authority to File Notices...................................................................   24
              9.10  Actions.....................................................................................   24
              9.11  Relationship of Parties.....................................................................   24
              9.12  Lender's Delay..............................................................................   24
              9.13  Attorneys' Fees; Enforcement................................................................   24
              9.14  Assignment..................................................................................   25
              9.15  Lender's Agents.............................................................................   25
              9.16  Severability................................................................................   25
              9.17  Heirs, Successors and Assigns...............................................................   25
              9.18  Rights Cumulative, No Waiver................................................................   25
              9.19  Time........................................................................................   25
              9.20  Headings....................................................................................   26
              9.21  Governing Law...............................................................................   26
              9.22  Integration; Interpretation.................................................................   26
</TABLE> 
                                     -ii-
<PAGE>
 
<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>          <C>                                                                                                <C> 
              9.23  Joint and Several Liability.................................................................   26
              9.24  Execution in Counterparts...................................................................   26
              9.25  Incorporation...............................................................................   26
              9.26  Credit for Principal Payments...............................................................   26
              9.27  WAIVER OF RIGHT TO TRIAL BY JURY............................................................   27
              9.28  Obligations under Ground Lease..............................................................   27
              9.29  Non-Recourse................................................................................   27
</TABLE>

EXHIBIT A - DESCRIPTION OF PROPERTY
EXHIBIT B - DISBURSEMENT BUDGET

                                     -iii-
<PAGE>
 
                          CONSTRUCTION LOAN AGREEMENT
                          ---------------------------

          THIS CONSTRUCTION LOAN AGREEMENT ("Agreement") is made as of January
1, 1995, between WILLOWS CONCORD VENTURE, a California limited partnership,
("Borrower") and NEW ENGLAND LIFE PENSION PROPERTIES; A Real Estate Limited
Partnership, and NEW ENGLAND LIFE PENSION PROPERTIES II; A Real Estate Limited
Partnership, each a Massachusetts limited partnership (jointly referral to
herein as "Lender").

          A.  Borrower is the ground tenant and Lender is the ground landlord of
certain real property described in Exhibit A hereto ("Property") under the
                                   ---------                              
Ground Lease (as hereinafter defined).

          B.  Borrower proposes to repair, renovate and rehabilitate the
Improvements (as hereinafter defined) located on the Property in accordance with
the Plans and Specifications (as hereinafter defined) and has requested a loan
from Lender for said purpose.

          THEREFORE, Borrower and Lender agree as follows:


                            ARTICLE I.  DEFINITIONS

          1.01  Defined Terms. As used herein, the following terms shall have
                -------------
the meanings set forth below:

          "Account" means a demand deposit account in the name of Borrower and
Lender which shall be opened with a bank approved by Lender and which shall be
administered in accordance with the terms of this Agreement.

          "ADA" means the Americans with Disabilities Act of July 26, 1990,
Public Law Number 101-336, 104 Stat. 327, 42 U.S.C. Section 12101, et seq., as
amended from time to time.

          "Agreement" means this Construction Loan Agreement as originally
executed or as it may from time to time be amended pursuant to Section 9.22
                                                               ------------
hereof.

          "Application for Payment" means a written itemized statement, signed
by Borrower, setting forth the matters described in Section 3.06 hereof.
                                                    ------------        

          "Assignment of Leases and Rents" means that certain Assignment of
Leases and Rents dated as of June 13, 1991, executed by Borrower in favor of
Lender, recorded on June 18, 1991 as Instrument No. 91-110715 in the Official
Records of Contra Costa County, California, as amended by that certain
Modification Agreement and First Amendment to Loan Documents dated as of 
<PAGE>
 
August 15, 1991, as further amended by that certain Modification Agreement and
Second Amendment to Loan Documents dated as of September 12, 1991, as further
amended by that certain Modification Agreement and Third Amendment to Loan
Documents dated as of October 15, 1991, as further amended by that certain
Fourth Amendment to Loan Documents dated as of December 17, 1992, and as further
amended by that Fifth Amendment to Loan Documents (as defined herein).

          "Authorized Borrower Representatives" means the persons designated by
Borrower to Lender in writing who are authorized to request disbursements of the
Loan until written notice of Borrower's revocation of such authority is received
by Lender at its office address shown herein.

          "Bankruptcy Act" means the Bankruptcy Reform Act of 1978, as amended
or recodified.

          "Borrower" means Willows Concord Venture, a California limited
partnership.

          "Borrower's Funds" means all funds which are now or hereafter
deposited and held in the Borrower's Funds Account pursuant to Section 3.01(b)
                                                               ---------------
of this Agreement.

          "Borrower's Funds Account" means a demand deposit account in the name
of Borrower and Lender which shall be opened with a bank approved by Lender and
which shall be administered in accordance with the terms of this Agreement.

          "CCP" means the California Code of Civil Procedure, as the same may be
amended or recodified.

          "Debtor Relief Law" means any present or future state or federal law
regulating bankruptcy, reorganization or other relief of debtors, other than the
Bankruptcy Act.

          "Deed of Trust" means that certain Deed of Trust and Security
Agreement dated as of June 13, 1991, by Borrower, as Trustor, to Chicago Title
Company, as Trustee, for the benefit of Lender, recorded in June 18, 1991 as
Instrument No. 91-116714 in the Official Records of Contra Costa County,
California, as amended by that certain Modification Agreement and First
Amendment to Loan Documents dated as of August 15, 1991, as further amended by
that certain Modification Agreement and Second Amendment to Loan Documents dated
as of September 12, 1991, as further amended by that certain Modification
Agreement and Third Amendment to Loan Documents dated as of October 15, 1991, as
further amended by that 

                                      -2-
<PAGE>
 
certain Fourth Amendment to Loan Documents dated as of December 17, 1992, and as
further amended by the Fifth Amendment to Loan Documents (as defined herein).

          "Default" means the occurrence of any of the events listed in Section
                                                                        -------
7.01 of this Agreement.
---- 
          "Disbursement Budget" means the budget and schedule for disbursement
of the loan proceeds attached as Exhibit B to this Agreement.
                                 ---------                   

          "Effective Date" means the date on which the Fifth Amendment to Loan
Documents is recorded in the office of the County Recorder of the County where
the Property is located.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may be amended or recodified.

          "Financing Statement" means that certain State of California Uniform
Commercial Code, Financing Statement, Form UCC-1, dated of even date herewith,
executed by Borrower, as Debtor, in favor of Lender, as Secured Party.

          "Fifth Amendment to Loan Documents" means that certain Fifth Amendment
to Loan Documents of even date herewith by and between Borrower and Lender.

          "Governmental Agency" means (a) any government or municipality or
political subdivision of any government or municipality, (b) any assessment,
improvement, community facilities or other special taxing district, (c) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
corporation, department, instrumentality or public body, or (d) any court,
administrative tribunal, arbitrator, public utility or regulatory body.

          "Ground Lease" means that certain Amended and Completely Restated
Ground Lease by and between Lender, as Landlord, and Borrower, as Tenant,
effective as of June 18, 1991.

          "Hazardous Materials" means oil, flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, hazardous wastes, toxic or
contaminated substances or similar materials, including, without limitation, any
substances which are "hazardous substances," "hazardous wastes," "hazardous
materials" or "toxic substances" under applicable environmental laws, ordinances
or regulations.

                                      -3-
<PAGE>
 
          "Hazardous Materials Claim," means any claim or action pending or
threatened against Borrower, the Property or Improvements by any Governmental
Agency or any other person or entity relating to Hazardous Materials or pursuant
to the Hazardous Materials Laws.

          "Hazardous Materials Laws" means all laws, ordinances and regulations
relating to Hazardous Materials, including, without limitation, those relating
to soil and ground water conditions.

          "Improvements" means the shopping center and any and all other
improvements located on the Property.

          "Initial Cure Period" means the period of time beginning with the date
on which written notice from Lender of Borrower's failure to perform any of its
non-monetary obligations under any of the Loan Documents is deemed served
pursuant to Section 9.08 of this Agreement upon Borrower and ending 30 days
            ------------                                                    
after such service.

          "Lender" means New England Life Pension Properties; A Real Estate
Limited Partnership, and New England Life Pension Properties II; a Real Estate
Limited Partnership, each a Massachusetts limited partnership (jointly referred
to herein as "Lender").

          "Leasehold Interest" means Borrower's leasehold interest under the
Ground lease (as defined herein) which demises the Property, together with all
estate, title, interests, title reversion rights, rents, increases, issues,
profits, rights of way or uses, additions, accretions, servitudes, gaps, gores,
liberties, privileges, water rights, water courses, alleys, streets, passages,
ways, vaults, adjoining strips of ground, licenses, tenements, franchises,
hereditaments, rights, appurtenances and easements, now or hereafter owned by
Borrower and existing, belonging or appertaining to the Leasehold Interest, all
claims or demands whatsoever of Borrower therein or thereto, either at law or in
equity, in possession or in expectancy and all estate, right, title and interest
of Borrower in and to all streets, roads and public places, opened or proposed,
now or hereafter used in connection with, existing, belonging or appertaining
to, the Property and/or the Leasehold Interest.

          "Loan" means the loan described in this Agreement in the principal sum
of $2,500,000.00.

          "Loan Documents" means this Agreement, the Note, the Deed of Trust,
the Assignment of Leases and Rents, the Security Agreement, and the Financing
Statement.

                                      -4-
<PAGE>
 
          "Maturity Date" shall have the meaning given to such term in the Note.

          "Note" means that certain Promissory Note of even date herewith in the
original principal amount of the Loan made by Borrower to the order of Lender.

          "Onsite Materials" means materials for the repair, renovation and
rehabilitation of the Improvements which are stored on the Property.

          "Original Note" means that certain Amended and Restated Promissory
Note dated effective as of June 14, 1991 made by Borrower in favor of Lender in
the principal amount of Fourteen Million Eight Hundred Sixty Three Thousand Two
Hundred Six and 38/100 Dollars ($14,863,206.38), which Original Note replaced
and superseded in its entirety that certain Promissory Note dated June 14, 1991
made by Borrower in favor of Lender in the principal amount of Fourteen Million
Eight Hundred Sixty Three Thousand Two Hundred Six and 38/100 Dollars
($14,863,206.38).

          "Plans and Specifications" shall mean the plans and specifications for
the Work (as defined herein) submitted or to be submitted and approved by
Lender, as such plans and specifications may be amended or modified with the
approval of Lender in accordance with the provisions of Section 4.05 of this
                                                        ------------        
Agreement.

          "Property" means the real property located in the County of Contra
Costa, State of California and more particularly described in Exhibit A hereto.
                                                              ---------        

          "Remedial Action" means all handling, treatment, removal, storage,
decontamination, cleanup, transport, disposal or other remedial action, if any,
required by any Hazardous Materials Laws, any order or request of any
governmental entity or agency or any judgment, consent decree, settlement or
compromise in respect to any Hazardous Materials Claims.

          "Requirements" means all applicable laws, ordinances, rules,
regulations, building restrictions, recorded covenants and restrictions, and
requirements of all Governmental Agencies having jurisdiction over the
Improvements or the Property.

          "Security Agreement" means that certain Security Agreement of even
date herewith executed by Borrower in favor of Lender.

          "Title Company" means a title insurer satisfactory to Lender.

          "Title Policy" means an LP-3 ALTA Lender's Policy of Title Insurance,
with any endorsements which Lender may reasonably

                                      -5-
<PAGE>
 
require, insuring Lender, in the principal amount of the Loan, of the validity
and priority of the lien of the Deed of Trust upon the Leasehold Interest and
the Improvements, subject only to matters approved by Lender in writing.

          "Work" means the repair, renovation and rehabilitation of the
Improvements in accordance with the Plans and Specifications.


                               ARTICLE II.  LOAN

          2.01  Loan.  By and subject to the terms of this Agreement, Lender
                ----                                                        
agrees to lend and Borrower agrees to borrow the principal sum of TWO MILLION
FIVE HUNDRED THOUSAND AND NO/100THS DOLLARS ($2,500,000.00), to finance the Work
and for the other purposes provided in the Loan Documents.

          2.02  Loan Documents.  Borrower shall deliver to Lender concurrently
                --------------                                                
with this Agreement the Loan Documents, properly executed and in recordable form
if necessary.

          2.03  Effective Date.  The date of the Loan Documents is for reference
                --------------                                                  
purposes only.  The date of delivery and transfer to Lender of the security
under the Loan Documents and of Borrower's and Lender's obligations under the
Loan Documents is the Effective Date.


                           ARTICLE III.  DISBURSEMENT

          3.01  Conditions Precedent.  Lender shall not be obligated to make any
                --------------------                                            
disbursements or take any other action under the Loan Documents unless all of
the following conditions precedent are satisfied at the time of such action:

                (a) There exists no Default, or event, omission or failure of
condition which would constitute a Default after notice or lapse of time, or
both;

                (b) The undisbursed Loan proceeds together with all sums (if
any) to be provided by Borrower as shown in the Disbursement Budget shall at all
times be not less than the amount which Lender from time to time determines
necessary to: (i) pay, through completion, all costs of the Work and the
marketing and sale or leasing of the Property and Improvements in accordance
with the Loan Documents; (ii) pay all sums which may accrue under the Loan
Documents prior to repayment of the Loan; and (iii) enable Borrower to perform
and satisfy all of the covenants of Borrower contained in the Loan Documents. If
Lender determines 

                                      -6-
<PAGE>
 
at any time that said funds are not sufficient for said purposes, Borrower may
satisfy this condition by depositing the amount of such deficiency in the
Borrower's Funds Account within seven (7) days of Lender's written demand;

                (c) Borrower has delivered to Lender all Loan Documents, other
documents, instruments, policies, and forms of evidence or other materials
requested by Lender under the terms of this Agreement or any of the other Loan
Documents; and

                (d) The Title Company shall be unconditionally committed to
issuing, at Borrower's sole cost and expense, an endorsement to the Title Policy
increasing the liability amount thereof to cover the amount of the loan, with
coverage and in a form satisfactory to Lender, insuring Lender's interest under
the Deed of Trust as a good and sufficient first lien on the Leasehold Interest
and the Improvements, subject only to such exceptions from its coverage as
Lender shall approve in writing.

                (e) Subject to the Ground Lease, Borrower shall have paid all
property taxes other than those which are a lien on the Property, but not yet
due and payable; and

                (f) At Borrower's sole cost and expense, the Fifth Amendment to
Loan Documents shall have been duly recorded in the Official Records of Contra
Costa County, California, and the Financing Statement shall have been duly filed
with the California Secretary of State.

          3.02  Account.  The proceeds of the Loan and Borrower's Funds, when
                -------                                                      
qualified for disbursement, shall be deposited into the Account or otherwise
disbursed to or for the benefit or account of Borrower under the terms of this
Agreement.

          3.03  Disbursement Authorization.  Disbursements hereunder may be made
                --------------------------                                      
by Lender to the Account upon the written request of the Authorized Borrower
Representatives.

          3.04  Borrower's Funds Account.  Except as otherwise provided in this
                ------------------------                                        
Agreement, Borrower's Funds shall be held in the Borrower's Funds Account and
disbursed in accordance with the terms hereof.

          3.05  Pledge and Assignment.  As security for Borrower's performance
                ---------------------                                         
under the Loan Documents, Borrower irrevocably pledges and assigns to Lender all
monies at any time deposited in the Account and the Borrower's Funds Account.

          3.06  Disbursement.  Subject to the conditions set forth in Section
                ------------                                          -------
3.01, the proceeds of the Loan and Borrower's Funds shall 

                                      -7-
<PAGE>
 
be disbursed, not more frequently than once per month, in accordance with the
following terms and conditions:

                (a) Unless another provision of this Agreement specifies
otherwise, from time to time throughout the term of the Loan, Borrower shall
submit to Lender an Application for Payment setting forth:

                    (i)    a description of the work performed, material
                           supplied and/or costs incurred or due for which
                           disbursement is requested with respect to any line
                           item ("Item") shown in the Disbursement Budget; and

                    (ii)   the total amount incurred, expended and/or due for
                           each requested Item less prior disbursements.

                (b) Lender shall have the right to condition any disbursement
upon Lender's receipt and approval of the following:

                      (i)  the Application for Payment;

                     (ii)  bills, invoices, documents of title, vouchers,
                           statements, payroll records, receipts and any other
                           documents evidencing the total amount expended,
                           incurred or due for any requested Items;

                    (iii)  evidence of Borrower's use of a lien release, joint
                           check and voucher system reasonably acceptable to
                           Lender for payments or disbursements to any
                           contractor, subcontractor, materialman, supplier or
                           lien claimant;

                     (iv)  physical inspections of the Work by Lender's
                           inspectors and/or engineers;

                      (v)  waivers and releases of mechanics' lien, stop notice
                           claim, equitable lien claim or other lien claim
                           rights;

                     (vi)  evidence of Borrower's compliance with the provisions
                           of Sections 4.03 and 6.01 of this Agreement;
                                       ----     ----                   

                    (vii)  valid, recorded Notice(s) of Completion for the Work
                           or any portions of the Work for which

                                      -8-
<PAGE>
 
                           Notice(s) of Completion may be recorded under
                           applicable law;

                   (viii)  the Architect's and Engineer's, if any, Certificate
                           of Substantial Completion, prior to the final
                           retention disbursement or the final stage
                           disbursement;

                     (ix)  any other document, requirement, evidence or
                           information that Lender may reasonably request under
                           any provision of the Loan Documents; and

                      (x)  in the event that any Application for Payment
                           includes the cost of Onsite Materials, such
                           Application for Payment shall include each of the
                           following: (a) evidence that the Onsite Materials
                           have been paid for by Borrower; (b) evidence that the
                           Onsite Materials are insured as required hereunder;
                           and (c) evidence that the Onsite Materials are stored
                           in an area on the Property for which adequate
                           security is provided against theft and vandalism.

          Borrower acknowledges that this approval process may result in
disbursement delays and Borrower consents to all such delays.

          (c) Disbursements made after the deposit of Borrower's Funds shall be
made from Borrower's Funds until depleted.

          (d) Lender shall have the option to make disbursement hereunder
directly to any contractor or supplier delivering goods or services in
connection with the Work.

          (e) Each Application for Payment by Borrower shall constitute a
representation and warranty by Borrower that Borrower is in compliance with all
the conditions precedent specified in Section 3.01 of this Agreement.
                                      ------------                   
     3.07  Disbursed Funds.  All disbursements shall be held by Borrower in
           ---------------                                                 
trust and applied by Borrower solely for the purposes for which the funds have
been disbursed.  Lender is not obligated to monitor or determine Borrower's use
or application of the disbursements.

                                      -9-
<PAGE>
 
                           ARTICLE IV.  CONSTRUCTION


     4.01  Commencement and Completion.  Unless otherwise provided by this
           ---------------------------                                    
Agreement, Borrower shall promptly commence the Work and shall diligently
continue and complete the Work in accordance with the Plans and Specifications
on or before December 31, 1995.

     4.02  Force Majeure.  The time within which the Work must be completed
           -------------                                                    
shall be extended for a period of time equal to the period of any delay directly
affecting the work which is caused by fire, earthquake or other Acts of God,
strike, lockout, acts of public enemy, riot, insurrection, or governmental
regulation of the sale or transportation of materials, supplies or labor
provided Borrower furnishes Lender with written notice (as specified in Section
                                                                        -------
4.12), of any such delay within ten (10) days from the occurrence of any such
----                                                                         
delay.  In no event, however, shall the time for completion of the Work be
extended beyond the Maturity Date.

     4.03  Construction.  Borrower shall perform and complete the Work in a good
           ------------                                                         
and workmanlike manner in accordance with the Plans and Specifications and the
recommendations of any soils or engineering report approved by Lender.  In
performing and completing the Work, Borrower shall comply with the Requirements.
If necessary, the Plans and Specifications shall be modified to comply with the
Requirements, subject to the provisions of Section 4.05 below.
                                           ------------       

     4.04  Americans With Disabilities Act Compliance.  Borrower represents and
           ------------------------------------------                          
warrants to Lender that the Work has been designed and shall be performed and
completed, and that the Improvements shall be operated and hereafter maintained,
in strict accordance and full compliance with all of the requirements of the
ADA.  Borrower is responsible for all ADA compliance costs, including, without
limitation, attorney's fees and litigation costs.

     4.05  Plans and Specifications.  Except as otherwise provided below, there
           ------------------------                                            
shall be no change in the Plans and Specifications without Lender's prior
written approval, which approval shall not be unreasonably withheld or delayed.
Requests for approval shall be submitted on a change order form acceptable to
Lender signed by Borrower and, if required by Lender, the project architect and
the general contractor (if any), accompanied by working drawings and a written
narrative of the proposed change.  As conditions to its approval, (a) Lender may
require reasonably satisfactory evidence of the cost of the proposed change and
the time necessary to complete the proposed change, and (b) to the extent Lender
reasonably determines that the proposed change shall result in 

                                      -10-
<PAGE>
 
increased cost, Lender may require Borrower to deposit the reasonable amount of
the increased cost into the Borrower's Funds Account in accordance with Section
                                                                        -------
3.01(b). Borrower acknowledges that this approval process may result in delays
-------
and consents to all such delays. Provided that Borrower submits any proposed
change order to Lender together with a cover letter specifying that Lender is to
reply within fifteen (15) days of its receipt thereof pursuant to this Section
                                                                       ------- 
4.05, Lender shall be deemed to have approved such change order if it fails to 
----
object in writing within fifteen (15) days of Lender's receipt of any such
change order and notice. Upon Lender's request, Borrower, the project architect,
and the general contractor (if any), shall initial the copy of the Plans and
Specifications delivered to, and approved by, Lender as a true copy of the Plans
and Specifications for the Work. Borrower shall maintain at all times a full set
of working drawings for the Work available for inspection by Lender.

Notwithstanding the above, Borrower may make minor changes in the Plans and
Specifications without Lender's prior written consent unless such change: (i)
constitutes a material change in the building material or equipment
specifications, the architectural or structural design, value, architecture, or
quality of any of the Improvements; or (ii) would result in an increase in any
item of construction cost in excess of TEN THOUSAND AND NO/100THS DOLLARS
($10,000.00) for any single change or in excess of FIFTY THOUSAND AND NO/100THS
DOLLARS ($50,000.00) for all such changes in such items of construction cost; or
(iii) would affect the structural integrity, quality of building material or
equipment or overall efficiency of operating systems or utility systems of the
Improvements; or (iv) requires the approval (which has not been given as of the
date of any such change) of any Governmental Agency or any other person or
entity.  Notwithstanding the foregoing, Borrower shall submit all proposed
changes to the Plans and Specifications to Lender at least fifteen (15) days
prior to the commencement of construction relating to such proposed change
whether or not any such change is subject to Lender's approval.

     4.06  Construction Information; Inspections.  From time to time, and within
           -------------------------------------                                
ten (10) business days of receipt from Lender of a request therefor, Borrower
shall deliver to Lender:

          (a) a complete list stating (i) the name, address and phone number of
each contractor, subcontractor and material supplier to be employed or used for
the Work, and (ii) the dollar amount, including changes if any, of each contract
and subcontract, and the portion thereof, if any, paid through the date of such
list;

          (b) copies of each contract and subcontract identified in such list,
including any changes thereto;

                                      -11-
<PAGE>
 
          (c) a cost breakdown, in a form reasonably acceptable to Lender,
stating the projected total cost of the Work, and the portion, if any, of each
cost item (i) which has been incurred, and (ii) which has been paid, all as of
the date of such cost breakdown;

          (d) a construction progress schedule, in a form reasonably acceptable
to Lender, showing the progress of the Work and the projected sequencing and
completion time for uncompleted work, all as of the date of such schedule; and

          (e) with respect to any item designated above which has been
previously delivered, such update thereof as Lender may request.

Lender is expressly authorized to contact any contractor, subcontractor or
material supplier and, at all reasonable times, to enter the Property and
inspect the Improvements and the Work in order to verify information disclosed
pursuant to this Section, or for any other reasonable purpose.

     4.07  Prohibited Contracts.  Without Lender's prior written consent, which
           --------------------                                                
consent shall not be unreasonably withheld or delayed, Borrower shall not
contract for any materials, furnishings, equipment, fixtures or other parts or
components of the Work, or other property for the use or occupancy of the
Property or Improvements, if any third party retains or purports to retain any
interest (other than lien rights, if any, created by operation of law) in such
items after their delivery to the Property.  Borrower shall have five (5) days
to effect the removal of any such retained interest

     4.08  Contractors.  Lender may, but shall not be obligated to, disapprove
           -----------                                                        
any contractor, subcontractor or material supplier whom Lender deems financially
or otherwise unqualified; provided, however, that the absence of any such
                          --------  -------                              
disapproval shall not constitute a representation of qualifications.

     4.09  Liens and Stop Notices.  If a claim of lien is recorded affecting the
           ----------------------                                               
Leasehold Interest or Improvements or a bonded stop notice is served upon Lender
which affects the Loan or Borrower's Funds, Borrower shall, within twenty (20)
days of such recording or service or within five (5) days of Lender's demand
(whichever occurs first), (a) pay and discharge the same, or (b) effect the
release thereof by recording or delivering to Lender a surety bond in sufficient
form and amount, or (c) otherwise provide Lender with other assurance which
Lender deems, in its sole discretion, 

                                      -12-
<PAGE>
 
to be satisfactory for the payment of such lien or bonded stop notice and for
the full and continuous protection of Lender from the effect of such lien or
bonded stop notice.                                                             
                                                                                
     4.10  Construction Responsibilities.  Borrower shall be solely responsible
           -----------------------------                                       
for all aspects of Borrower's business and conduct in connection with the
Leasehold Interest and Improvements, including, without limitation, the quality
and suitability of the Plans and Specifications and their compliance with the
Requirements, the supervision of the Work, the qualifications, financial
condition and performance of all architects, engineers, contractors, material
suppliers, consultants and property managers, and the accuracy of all
applications for payment and the proper application of all disbursements.
Lender is not obligated to supervise, inspect or inform Borrower or any third
party of any aspect of the Work or any other matter referred to above.  Any
inspection or review by Lender is to determine whether Borrower is properly
discharging its obligations to Lender and may not be relied upon by Borrower or
any third party.  Lender owes no duty of care to Borrower or any third party to
protect against, or to inform Borrower or any third party of, any negligent,
faulty, inadequate or defective design or construction of the Work.

     4.11  Improvement District.  Without Lender's prior written consent,
           --------------------                                          
Borrower shall not, directly or indirectly, advocate or assist in the
incorporation of any of the Property or Improvements into any improvement or
other assessment district.

     4.12  Delay.  Borrower shall promptly notify Lender in writing of any event
           -----                                                                
causing delay or interruption of the Work, or the timely completion of the Work.
The notice shall specify the particular work delayed, and the cause and period
of each delay.

     4.13  Bonds.  Within five (5) days of Lender's request, Borrower shall
           -----                                                           
procure from a surety acceptable to Lender, and deliver to Lender, dual obligee
performance and labor and material payment bonds in a form, substance and amount
reasonably acceptable to Lender and, if requested by Lender, cause any such bond
to be recorded and the Plans and Specifications and construction agreement, if
any, to be filed in the office of the County Recorder of the County where the
Property is located.

     4.14  Capital Expenditures and Reserves.  Borrower shall not make any
           ---------------------------------                              
capital improvement to the property other than those described in the Plans and
Specifications (as the same may be changed pursuant to Section 4.05 hereof) or
expend or reserve any income or revenue derived from the Property for any such
capital improvement without Lender's prior approval for each such capital
improvement, expenditure or reserve.

                                      -13-
<PAGE>
 
                             ARTICLE V.  INSURANCE

     5.01  Title Insurance.  Borrower shall procure the endorsement to the Title
           ---------------                                                      
Policy described in Section 3.01(d).  During the term of the Loan, Borrower
shall procure and deliver to Lender, within five (5) business days of Lender's
written request to Borrower, such other endorsements to the Title Policy as
Lender may reasonably require.

     5.02  Hazard Insurance.  Borrower shall procure and maintain from an
           ----------------                                              
insurer reasonably satisfactory to Lender a policy of Builders Risk Completed
Value hazard insurance, with a vandalism and malicious mischief endorsement and
such other endorsements as Lender may reasonably require, insuring Lender
against damage to the Property in a amount reasonably acceptable to Lender.
Lender shall be named under a Lender's Loss Payable Endorsement (form #438BFU or
equivalent) attached to the policy.  At Lender's request, the policy shall
contain an agreed value clause sufficient (as reasonably determined by Lender)
to eliminate any risk of co-insurance.

     5.03  Flood Zone Notification.  If required by applicable law, Borrower, as
           -----------------------                                              
ground tenant of the Property and the Improvements under any existing or future
lease or sale agreement, shall promptly give written notice to all lessees or
purchasers of the Leasehold Interest of the fact that the Property and the
Improvements are or will be located in a flood hazard area.  Borrower
acknowledges that, to the extent required, such written notices have been given
by it or will be promptly given.

     5.04  Liability Insurance.  Borrower shall procure and maintain from an
           -------------------                                              
insurer reasonably satisfactory to Lender a policy of comprehensive public
liability insurance and property damage insurance with limits as reasonably
required by Lender, insuring against liability for injury or death to any person
and property damage occurring on the Property or in the Improvements from any
cause whatsoever.  Such policy shall name Lender as an additional insured.

     5.05  Blanket Coverage.  Lender may accept blanket insurance policies in
           ----------------                                                  
satisfaction of Borrower's obligations to provide insurance.

     5.06  General.  Borrower shall procure and maintain all other insurance
           -------                                                          
required by the Requirements, this Agreement, the Deed of Trust or applicable
law.  Lender shall receive the originals of all required insurance policies, or
other evidence of insurance reasonably acceptable to Lender.  Borrower shall
maintain all required insurance until the Loan is repaid.  All insurance

                                      -14-
<PAGE>
 
policies shall provide that the insurance shall not be cancellable without
twenty (30) days prior written notice to Lender. All insurance policies shall be
issued by licensed insurance companies acceptable to Lender.


                  ARTICLE VI.  REPRESENTATIONS AND WARRANTIES

     Borrower makes the following representations and warranties as of the
Effective Date and continuing thereafter:

     6.01  Authority.  Borrower has complied with all laws and regulations
           ---------                                                      
concerning its organization, existence and transaction of business.  Borrower
has the right and power to lease the Property and Improvements as ground tenant
as contemplated in the Loan Documents and the Ground Lease.   Borrower has, or
at all appropriate times shall have, properly obtained all permits, licenses and
approvals necessary to perform the Work and to use, occupy and market the
Improvements, and has complied with the Requirements and all other applicable
statutes, laws, regulations and ordinances.

     6.02  Formation and Organizational Documents.  Borrower has delivered to
           --------------------------------------                            
Lender all of the relevant information and organizational documents of Borrower,
of the partners or joint venturers of Borrower (if any), and of all guarantors
of the Loan (if any), and all such formation and organizational documents remain
in full force and effect and have not been amended or modified since they were
delivered to Lender.  If any such formation or organizational document is
hereafter amended or modified, Borrower shall immediately provide Lender with
notice in writing of such change.

     6.03  Enforceability.  Borrower is authorized to execute deliver, to
           --------------                                                
perform its obligations under, the Loan Documents, which obligations are the
valid and binding obligations of Borrower.

     6.04  No Violation.  Borrower's undertakings in the Loan Documents do not
           ------------                                                       
violate any of the Requirements or any other applicable statute, law, regulation
or ordinance or any order or ruling of any court or governmental entity, or
conflict with, or constitute a breach or default under, any agreement by which
Borrower is, or the Leasehold Interest and Improvements are, bound or regulated.
Borrower is not in violation of any statute, law, regulation or ordinance, or of
any order of any court or governmental entity.  There are no claims, actions or
proceedings pending or, to Borrower's knowledge, threatened against Borrower or
affecting the Leasehold Interest or Improvements other than those disclosed to
Lender in writing.

                                      -15-
<PAGE>
 
     6.05  Financial Information.  All financial information delivered to
           ---------------------                                         
Lender, including, without limitation, information relating to the financial
condition of Borrower, the Leasehold Interest, the Improvements, partners or
joint venturers of Borrower, or guarantors, fairly and accurately represents
such financial condition and has been prepared in accordance with generally
accepted accounting principles consistently applied, unless otherwise noted in
such information.  No material adverse change in such financial condition has
occurred.

     6.06  Accuracy.  All reports, documents, instruments, information and forms
           --------                                                             
of evidence delivered to Lender concerning the Loan or security for the Loan or
required by the Loan Documents are accurate, correct and sufficiently complete
to give Lender true and accurate knowledge of their subject matter, and do not
contain any misrepresentation or omission.

     6.07  Adequacy of Loan.  The undisbursed Loan proceeds, together with
           ----------------                                               
Borrower's Funds and all other sums (if any) to be provided by Borrower as shown
in Exhibit B, are sufficient to do all of the things specified in Section
   ---------                                                      -------
3.01(b).
------- 

     6.08  Taxes.  Borrower has filed all required federal, state, county and
           -----                                                             
municipal tax returns and has paid all taxes owed and payable by Borrower, and
Borrower knows of no basis for any additional assessment with respect to any
such taxes.

     6.09  Compliance.  Borrower is familiar with all Requirements.  The
           ----------                                                   
development of the Property and the construction of the Improvements will
conform to and comply with the Requirements and the Plans and Specifications.


                             ARTICLE VII.  DEFAULT

     7.01  Default.  The following shall constitute an event of default under
           -------                                                           
the Loan Documents:

          (a) Monetary.  At Lender's option, (i) Borrower's failure to pay
              --------                                                    
within fifteen (15) days of the date due any sums payable under the Note, the
Original Note or any of the other Loan Documents; or (ii) Borrower's failure to
deposit any Borrower's Funds as and when required under Section 3.01(b); or
                                                        ---------------    

          (b) Performance of Obligations.  Borrower's failure to perform any of
              --------------------------                                       
its other obligations (in addition to those in Section 7.01(a) above) under any
                                               ---------------                 
of the Loan Documents within the Initial Cure Period, or, within ninety (90)
days after written notice so long as Borrower begins within the Initial Cure
Period and diligently continues to cure the failure, and Lender, 

                                      -16-
<PAGE>
 
exercising reasonable judgment, determines that the cure cannot reasonably be
completed at or before expiration of the Initial Cure Period; or

          (c) Construction; Use.  (i) Any material deviation in the Work from
              -----------------                                              
the Plans and Specifications or Requirements or the appearance or use of
defective workmanship or materials in performing the Work, and Borrower's
failure to remedy the same to Lender's reasonable satisfaction within thirty
(30) days of Lender's written demand to do so; or (ii) the cessation of the Work
prior to completion for a continuous period of more than thirty (30) days,
unless such cessation is (A) a result of a casualty or taking and Borrower
diligently continues to restore the Property in accordance with the provisions
of Section 5 of the Deed of Trust, or (B) caused by events for which delay may
   ---------                                                                  
be permitted under Section 4.02 hereof; or (iii) the curtailment in availability
                   ------------                                                 
to the Property or Improvements of utilities or other public services necessary
for the full occupancy and utilization of the Improvements for a continuous
period of more than thirty (30) days; or

          (d) Liens; Attachment; Condemnation.  (i) The filing of any claim of
              -------------------------------                                 
lien against the Leasehold Interest or Improvements or the service on Lender of
any bonded stop notice relating to the Loan and the continuance of the claim of
lien or bonded stop notice for twenty (20) days without discharge, satisfaction
or provision for payment being made in accordance with Section 4.09; or (ii) the
                                                       ------------             
condemnation, seizure or appropriation of, or occurrence of an uninsured
casualty with respect to any material, as determined by Lender in its sole and
absolute discretion, portion of the Property or Improvements, unless (A) within
sixty (60) days after any such condemnation, seizure or appropriation, or
occurrence of an uninsured casualty, Borrower submits to Lender a written
proposal reasonably satisfactory to Lender for the repair or restoration of the
Property or Improvements, as the case may be, using funds provided by Borrower,
such that the value of the Leasehold Interest or Improvements, as the case may
be, is not materially impaired as a result thereof, and (B) Borrower diligently
pursues such repair or restoration to completion in a good and workmanlike
manner; or

          (e) Representations and Warranties.  The failure of any of Borrower's
              ------------------------------                                   
representations or warranties in any of the Loan Documents to be true within
thirty (30) days after notice by Lender; or

          (f) Change in Management or Control.  The occurrence of any
              -------------------------------                        
management, organizational or other material change in the Borrower or the
partners or venturers thereof, including, without limitation, partnership or
joint venture disputes, which Lender 

                                      -17-
<PAGE>
 
determines, in its reasonable discretion, will have a material adverse effect on
the Loan, the Leasehold Interest, the security for the Loan or upon Borrower's
or its partners' and venturers' ability to perform their obligations under the
Loan Documents, without Lender's prior written consent; provided, however, that
Lender shall not unreasonably withhold or delay its consent to any 
(i) distribution to any general or limited partner of Borrower of such partner's
respective interest therein or (ii) assignment or transfer by any general or
limited partner of Borrower of its respective interest so distributed to any
person or entity controlling, controlled by, or under common control with such
general or limited partner (each an "Affiliate"), provided that (A) such
distribution, assignment or transfer is made for the purpose of accomplishing a
tax free exchange under Section 1031 of the Internal Revenue Code of 1986, as
amended, and (B) any and all such Affiliates agree to assume all of the
liabilities and obligations of Borrower and such general or limited partner to
Lender pursuant to a written instrument satisfactory to Lender.

          (g) Acceleration Upon Loss of Security.  If at any time the Deed of
              ----------------------------------                             
Trust ceases to be a valid first lien upon the Leasehold Interest and
Improvements subject only to such other liens and encumbrances approved by
Lender and shown in the Title Policy.

          (h) Cross-Default.  The occurrence of any Event of Default under the
              -------------                                                   
Deed of Trust.

     7.02  Acceleration.  Upon the occurrence of a Default specified in 
           ------------
Sections 7.01, Lender may, at its option, declare all sums owing to Lender under
-------- ----
the Note, the Original Note and the other Loan Documents immediately due and
payable. Upon the occurrence of any Default specified in any of the Loan
Documents which provides that acceleration shall be automatic, all sums owing to
Lender under the Note, the Original Note and the other Loan Documents shall
automatically become immediately due and payable. Upon acceleration, Lender may,
in addition to other uses permitted under the Loan Documents, apply undisbursed
Loan proceeds and any sums in the Account and the Borrower's Funds Account to
the sums owing to Lender under the Loan Documents in such order as Lender may
elect. Without limitation of the provisions of Section 7.04 hereof, Borrower
                                               ------------
hereby irrevocably appoints Lender as its true and lawful attorney-in-fact,
which agency is coupled with an interest, to accomplish the foregoing actions
and rights of Lender or transfer of such funds to Lender.

     7.03  Disbursement by Lender.  Upon the occurrence of a Default which is
           ----------------------                                            
occasioned by Borrower's failure to pay money, Lender may but shall not be
obligated to make such payment from Loan proceeds, Borrower's Funds, or other
funds of Lender.  If 

                                      -18-
<PAGE>
 
such payment is made from proceeds of the Loan or from Borrower's Funds,
Borrower shall deposit in the Borrower's Funds Account, upon written demand
issued pursuant to Section 3.01(b), an amount equal to such payment. If such
                   ---------------
payment is made from funds of Lender, Borrower shall repay such funds upon
demand issued pursuant to Section 7.06. In either case, the Default with respect
                          ------------
to which any such payment has been made by Lender shall not be deemed cured
until such deposit or repayment (as the case may be) has been made by Borrower.

     7.04  Lender's Completion of Construction.  If a Default occurs, Lender
           -----------------------------------                              
may, upon five (5) days written notice to Borrower, and with or without legal
process, take possession of the Property and Improvements, remove Borrower and
all agents, employees and contractors of Borrower from the Property and
Improvements, complete the Work and market and sell or lease the Leasehold
Interest and the Improvements.  Borrower irrevocably appoints Lender as its
attorney-in-fact, which agency is coupled with an interest for the purposes of
effecting the provisions of this Section 7.04.  As attorney-in-fact, Lender may,
                                 ------------                                   
in Borrower's name, take or omit to take any action Lender may deem appropriate,
including, without limitation, exercising Borrower's rights under the Loan
Documents and all contracts concerning the Property and/or Improvements.

     7.05  Cessation of Construction.  If Lender reasonably determines that the
           -------------------------                                           
Work is not being performed in accordance with the Plans and Specifications, the
Requirements, or the Loan Documents, Lender may order all Work affected by the
condition of nonconformance immediately stopped.  After that order, Borrower
shall not allow any Work, other than corrective work, to be performed on any of
the Property or Improvements affected by the condition of nonconformance until
Lender notifies Borrower in writing that the nonconforming condition has been
corrected, which notice shall be provided by Lender promptly after completion of
the corrective work and receipt of notice from Borrower that such work has been
completed.

     7.06  Repayment of Funds Advanced.  If Lender spends its funds in
           ---------------------------                                
exercising any of its rights or remedies under the Loan Documents, the amount of
funds spent shall be payable to Lender upon demand, together with interest at
the rate applicable to the principal balance of the Note as specified therein
plus 2% per annum, from the date the funds were spent.  Until repaid, such
amounts shall have the security afforded disbursements under the Note.

     7.07  Right of Contest.  Borrower may contest in good faith any claim,
           ----------------                                                
demand, levy or assessment (other than liens and stop notices, provision for
which is made in Section 4.09) by any 
                 ------------

                                      -19-
<PAGE>
 
person other than Lender which would constitute a Default if (a) Borrower
pursues the contest diligently and in a manner which Lender determines is not
prejudicial to Lender and does not impair the rights of Lender under any of the
Loan Documents; and (b) Borrower deposits with Lender any funds or other forms
of assurance which Lender in good faith from time to time reasonably determines
appropriate to protect Lender from the consequences of the contest being
unsuccessful. Borrower's compliance with this Section shall operate to prevent
such claim, demand, levy or assessment from becoming a Default.


                       ARTICLE VIII.  HAZARDOUS MATERIALS

     8.01  Covenants.  Without limitation of the provisions of the Ground Lease
           ---------                                                           
or any other agreement, covenant or restriction by which Borrower may be bound,
Borrower hereby agrees as follows:

          (a) No Hazardous Activities.  Borrower shall not cause or knowingly
              -----------------------                                        
permit any Hazardous Materials to be brought onto the Property in violation of
applicable law.

          (b) Hazardous Materials Laws.  Borrower shall comply and cause the
              ------------------------                                      
Property to comply with all Hazardous Materials Laws in connection with the
Work.

          (c) Notices.  Borrower shall immediately notify Lender in writing of:
              -------                                                          
(i) the discovery by Borrower of any breach or violation of the foregoing
clauses (a) and (b) of this Section, or (ii) the receipt by Borrower of written
notice of any Hazardous Materials Claims.

          (d) Remedial Action.  Subject to applicable law, in response to
              ---------------                                            
Borrower's actual knowledge of the presence of any Hazardous Materials on or
under the Property resulting from any breach or violation of the foregoing
clauses (a) and (b) of this Section, Borrower shall promptly commence and
thereafter diligently pursue, at no cost or expense to Lender, all Remedial
Action in connection with such Hazardous Materials.  The foregoing, however,
shall be subject to Borrower's right of contest under Section 8.02, below.
                                                      ------------        

     8.02  Right of Contest.  Borrower may contest in good faith any claim,
           ----------------                                                
demand, levy or assessment under the Hazardous Materials Laws or any Hazardous
Materials Claims made by any person or entity if: (a) the contest is based on a
material question of law or fact raised by Borrower in good faith; (b) Borrower
promptly commences and thereafter diligently pursues the contest; (c) the
contest will not materially impair the taking of any Remedial Action with
respect to such claim, demand, levy or 

                                      -20-
<PAGE>
 
assessment under Hazardous Materials Laws or Hazardous Materials Claims; and
(d) Borrower demonstrates to Lender's reasonable satisfaction that Borrower has
the financial capability to undertake and pay for such contest and any Remedial
Action when reasonably necessary. No Default shall be deemed to exist with
respect to any claim, demand, levy or attachment being contested by Borrower in
accordance with the foregoing terms of this Section 8.02.
                                            ------------ 

     8.03  Indemnity.  Notwithstanding anything to the contrary set forth in
           ---------                                                        
Section 9.29, the duty of Borrower to indemnify Lender and the liability of
------------                                                               
Borrower to Lender under Section 9.02 shall not be secured by the Deed of Trust
                         ------------                                          
or subject to any "non-recourse" or "limitation of liability" provisions of this
Agreement or any other Loan Document if such duty to indemnify arises out of a
breach of Section 8.01 hereof.  Borrower acknowledges that Lender's appraisal of
          ------------                                                          
the Leasehold Interest and Improvements is such that Lender is not willing to
accept the consequences under California's "One Form of Action Rule" (i.e.
Section 726 of the CCP) and "Anti-Deficiency Rules" (i.e. Sections 580(a),
580(b) and 580(d) of the CCP) of the inclusion of Borrower's duty to indemnify
Lender with respect to the matters described above in this Section 8.03 among
                                                           ------------      
the obligations secured by the Deed of Trust and that Lender would not make the
Loan but for the unsecured personal liability undertaken by Borrower in
connection with such matters.  Borrower further acknowledges that Lender's right
to indemnification with respect to such matters is in addition to, and not in
limitation of, all of the rights and remedies which Lender may possess at law or
in equity at any time under any Hazardous Materials Laws.

     8.04  Inspection By Lender.  Upon reasonable prior notice to Borrower,
           --------------------                                            
Lender, its employees and agents, may from time to time (whether before or after
the commencement of a nonjudicial or judicial foreclosure proceeding) enter and
inspect the Property for the purpose of determining the existence, location,
nature and magnitude of any past or present release or threatened release of any
Hazardous Materials into, onto, beneath or from the Property.


                     ARTICLE IX.  MISCELLANEOUS PROVISIONS


     9.01  Expenses.  Borrower shall pay Lender immediately upon demand all
           --------                                                        
costs and expenses incurred by Lender in connection with the enforcement or
satisfaction by Lender of any of Borrower's obligations under this Agreement or
under the Loan Documents.  For all purposes of this Agreement, Lender's costs
and expenses shall include, without limitation, all appraisal fees, cost
engineering and inspection fees, legal fees, accounting fees, 

                                      -21-
<PAGE>
 
environmental consultant fees (if any), auditor fees, and the cost to Lender of
any title insurance premiums and title surveys. If any of the services described
in this Section are provided by an employee of Lender, Borrower shall reimburse
Lender its standard charge for such services.

     9.02  Indemnity.  Borrower indemnifies Lender against, and holds Lender
           ---------                                                        
harmless from, any losses, damages, liabilities, claims, actions, judgments,
court costs and legal or other expenses (including reasonable attorneys' fees)
which Lender may incur as a direct or indirect consequence of: (i) the making of
the Loan, except for violations of lending laws or regulations by Lender; or
(ii) Borrower's failure to perform any obligations as and when required by this
Agreement or any of the Loan Documents; or (iii) any failure at any time of any
of Borrower's representations or warranties to be true and correct, or (iv) any
act or omission by Borrower, any contractor, subcontractor or material supplier,
engineer, architect or other person or entity with respect to any of the Work.
Borrower shall pay immediately upon Lender's demand any amounts owing under this
indemnity together with interest from the date the indebtedness arises until
paid at the rate of interest applicable to the principal balance of the Note as
specified therein plus 2% per annum.  Borrower's duty to indemnify Lender shall
survive the release and cancellation of the Note and the reconveyance or partial
reconveyance of the Deed of Trust.

     9.03  Records.  Borrower shall maintain complete books of accounts and
           -------                                                         
other records for the Work, the Leasehold Interest and Improvements and for
disbursement and use of the Loan proceeds and Borrower's Funds, and during
normal business hours upon not less than two (2) business days' notice the same
shall be available for inspection and copying by Lender.

     9.04  ERISA Compliance.  Borrower shall at all times comply with the
           ----------------                                              
provisions of ERISA with respect to any retirement or other employee benefit
plan to which it is a party as employer, and as soon as possible after Borrower
knows, or has reason to know, that any Reportable Event (as defined in ERISA)
with respect to any such plan of Borrower has occurred, it shall furnish to
Lender a statement in writing setting forth details as to such Reportable Event
and the action, if any, which Borrower proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event furnished to the
Pension Benefit Guaranty Corporation.

     9.05  Further Assurances.  At Lender's request and at Borrower's expense,
           ------------------                                                 
Borrower shall execute, acknowledge and deliver any other instruments and
perform any other acts 

                                      -22-
<PAGE>
 
necessary, desirable or proper (as reasonably determined by Lender) to carry out
the purposes of the Loan Documents or to perfect and preserve any liens created
by the Loan Documents.

     9.06  Form of Documents.  The form and substance of all documents,
           -----------------                                           
instruments, and forms of evidence to be delivered to Lender under the terms of
any of the Loan Documents shall be subject to Lender's approval (which approval
shall not be unreasonably withheld or delayed) and shall not be modified,
superseded or terminated in any respect without Lender's prior written approval.

     9.07  No Third Parties Benefitted.  No person other than Lender and
           ---------------------------                                  
Borrower and their permitted successors and assigns shall have any right of
action under any of the Loan Documents.

     9.08  Notices.  Any notice, request, demand or other communication required
           -------                                                              
or permitted under the Loan Documents (unless otherwise expressly provided
therein) shall be given in writing by delivering the same in person to the
intended addressee by overnight courier service with guaranteed next day
delivery or by certified United States mail, postage prepaid or telegram sent to
the intended addressee at the applicable address set forth below or to such
different address as either Lender or Borrower shall have designated by written
notice to the other sent in accordance herewith.  Such notices shall be deemed
given when received or, if earlier, in the case of delivery by courier service
with guaranteed next day delivery, the next day or the day designated for
delivery, or in the case of delivery by certified United States mail, two days
after deposit therein.  No notice to or demand on Borrower in any case shall of
itself entitle Borrower to any other or further notice or demand in similar or
other circumstances.

     Notice addresses:

     If to Borrower:    c/o Mr. William Thormahlen
                        Sares-Regis Group
                        18802 Bardeen Avenue
                        Irvine, California  92715-1521


     If to Lender:      c/o Copley Real Estate Advisors, Inc.
                        399 Boylston Street
                        Boston, Massachusetts  02116
                        Attention:  General Counsel

                                      -23-
<PAGE>
 
     with a copy to:  Hale and Dorr
                      60 State Street
                      Boston, MA  02109
                      Attention:  Kenneth A. Hoxsie, Esq.


     9.09  Authority to File Notices.  Borrower irrevocably appoints and
           -------------------------                                    
authorizes Lender, as Borrower's attorney-in-fact, which agency is coupled with
an interest, to execute and/or record in Lender's or Borrower's name any
notices, instruments or documents that Lender deems appropriate to protect
Lender's interest under any of the Loan Documents.

     9.10  Actions.  Lender may commence, appear in or defend any action or
           -------                                                         
proceeding purporting to affect the Leasehold Interest, Improvements, Loan
Documents or the rights, duties or liabilities of Borrower or Lender under the
Loan Documents.  In exercising this right, Lender may incur and pay costs and
expenses including, without limitation, reasonable attorneys' fees and court
costs and Borrower agrees to pay all such expenses so incurred or paid.

     9.11  Relationship of Parties.  The relationship of Borrower and Lender
           -----------------------                                          
under the Loan Documents is, and shall at all times remain, solely that of
borrower and lender.  Lender neither undertakes nor assumes any responsibility
or duty to Borrower or to any third party with respect to the Leasehold
Interest, Improvements or Loan, except as expressly provided in the Loan
Documents and the Ground Lease.

     9.12  Lender's Delay.  Lender shall not be liable in any way for Lender's
           --------------                                                     
failure to perform or delay in performing under the Loan Documents, and Lender
may suspend or terminate all or any portion of Lender's obligations under the
Loan Documents if Lender's delay or failure results directly or indirectly from,
or is based upon, the action, inaction, or purported action, of any Governmental
Agency, or any other cause or event identified in Section 4.02 hereof.
                                                  ------------        

     9.13  Attorney's Fees; Enforcement.  If any attorney is engaged by Lender
           ----------------------------                                       
to enforce, or defend any provision of any of the Loan documents, or as a
consequence of any Default under the Loan Documents, with or without the filing
of any legal action or proceeding, Borrower shall pay to Lender, immediately
upon demand, the amount of all attorneys' fees and costs incurred by Lender in
connection therewith, together with interest thereon from the date of such
demand until paid at the rate of interest applicable to the principal balance of
the Note as specified therein plus 2% per annum.

                                      -24-
<PAGE>
 
     9.14  Assignment.  Borrower shall not assign Borrower's interest under any
           ----------                                                          
of the Loan Documents, or in any monies due or to become due thereunder, without
Lender's prior written consent.  Any assignment made without Lender's consent
shall be void.  Borrower recognizes that this is not an ordinary loan and that
Lender would not make this Loan except in reliance on Borrower's expertise and
reputation, Lender's knowledge of Borrower, and Lender's understanding that this
Agreement is more in the nature of an agreement involving personal services than
a standard loan where Lender would rely on security upon which no additional
work is planned.  In this instance, Lender is relying on Borrower's expertise
and prior experience to perform and complete the Work in accordance with the
terms of the Loan Documents.

     9.15  Lender's Agents.  Lender may designate an agent or independent
           ---------------                                               
contractor to exercise any of Lender's rights under the Loan Documents.  Any
reference to Lender in any of the Loan Documents shall include Lender's agents,
employees or independent contractors.

     9.16  Severability.  If any provision of the Loan Documents shall be
           ------------                                                  
determined by a court of competent jurisdiction to be invalid, illegal or
unenforceable, that portion shall be deemed severed from the Loan Documents and
the remaining parts shall remain in full force as though the invalid, illegal,
or unenforceable portion had never been part of the Loan Documents.

     9.17  Heirs, Successors and Assigns.  The terms of the Loan Documents shall
           -----------------------------                                        
be binding upon and inure to the benefit of the heirs, successors and assigns of
the parties; provided however, that this Section does not waive the provisions
of Section 9.14.
   ------------ 

     9.18  Rights Cumulative, No Waiver.  All Lender's rights and remedies
           ----------------------------                                   
provided in the Loan Documents, granted by law or otherwise, are cumulative and
may be exercised by Lender at any time.  Lender's exercise of any right or
remedy shall not constitute a cure of any Default unless all sums then due and
payable to Lender under the Loan Documents are repaid and Borrower has cured all
other Defaults.  No waiver shall be implied from any failure of Lender to take,
or any delay by Lender in taking, action concerning any Default or failure of
condition under the Loan Documents, or from any previous waiver of any similar
or unrelated Default or failure of condition.  Any waiver or approval under any
of the Loan Documents must be in writing and shall be limited to its specific
terms.

     9.19  Time.  Time is of the essence of each term of the Loan Documents.
           ----                                                             

                                      -25-
<PAGE>
 
     9.20  Headings.  All headings appearing in any of the Loan Documents are
           --------                                                          
for convenience only and shall be disregarded in construing the Loan Documents.

     9.21  Governing Law.  The Loan Documents shall be governed by, and
           -------------                                               
construed in accordance with, the laws of the State of California, except to the
extent preempted by Federal laws.  Borrower and all persons and entities in any
manner obligated to Lender under the Loan Documents consent to the jurisdiction
of any Federal or State Court within the State of California having proper venue
and also consent to service of process by any means authorized by California or
Federal Law.

     9.22  Integration; Interpretation.  The Loan Documents contain or expressly
           ---------------------------                                          
incorporate by reference the entire agreement of the parties with respect to the
matters contemplated herein and supersede all prior negotiations.  The Loan
Documents shall not be modified except by written instrument executed by all
parties.  Any reference in any of the Loan Documents to the Property, the
Leasehold Interest or Improvements shall include all or any part of the
Property, the Leasehold Interest or Improvements.  Any reference to the Loan
Documents in any of the Loan Documents includes any amendments, renewals or
extensions approved by Lender.  Any reference in this Agreement to the Loan
Documents shall include all or any of the provisions of this Agreement and the
Loan Documents unless otherwise specified.

     9.23  Joint and Several Liability.  The liability of all persons and
           ---------------------------                                   
entities who are in any manner obligated under any of the Loan Documents shall
be joint and several.

     9.24  Execution in Counterparts.  This Agreement, and other Loan Documents
           -------------------------                                           
which expressly so provide, may be executed in any number of counterparts, each
of which when executed and delivered will be deemed to be an original and all of
which, taken together, will be deemed to be one and the same instrument.

     9.25  Incorporation.  Exhibits A and B attached hereto are incorporated
           -------------            -     -                                 
into this Agreement.

     9.26  Credit for Principal Payments.  Any payment made upon the outstanding
           -----------------------------                                        
principal balance of the Loan shall be credited as of the business day upon
which the applicable following condition has occurred by no later than
11:00 a.m. (Pacific Standard Time or Pacific Daylight Time, as appropriate):

          (a) In the case of a principal payment made by a federal funds wire
transfer, upon receipt by Lender of written advice from the Federal Reserve
System confirming that the transferred amount has been credited for the account
of Lender; or

                                      -26-
<PAGE>
 
          (b) In the case of a principal payment made by either a cashier's
check, or in the case of a check drawn upon a deposit account in which there are
then sufficient funds on deposit for the payment of said check, upon receipt by
Lender of such check or cashier's check at the address designated elsewhere
herein for the delivery to Lender of notices.

     9.27  WAIVER OF RIGHT TO TRIAL BY JURY.  EACH PARTY TO THIS AGREEMENT
           --------------------------------                               
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS OR THE ORIGINAL NOTE,
INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR
(b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS OR THE ORIGINAL
NOTE (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.

     9.28  Obligations Under Ground Lease.  Nothing contained in this Agreement
           ------------------------------                                      
shall be construed to relieve or excuse Borrower of any of its obligations in
its capacity as ground tenant under the Ground lease.

     9.29  Nonrecourse.
           ----------- 

          (a) Borrower shall be liable upon the indebtedness evidenced by the
Note, for all sums to accrue or to become payable thereunder, and for
performance of any covenants contained in any of the Loan Documents to the
extent, but only the extent, of Lender's security for the same, including,
without limitation, all properties, rights, estates, and interests covered by
this Agreement and the Loan Documents.  No attachment, execution or other writ
of process shall be sought, issued or levied upon any assets, properties or
funds of Borrower other than the properties, rights, estates and interest
described in this Agreement and the other Loan Documents.  In the event of
foreclosure of such title, liens, mortgages or security interests, by private
power of sale or otherwise, no judgment for any deficiency upon such
indebtedness, sums and amounts shall be sought or obtained by Lender against
Borrower.

                                      -27-
<PAGE>
 
          (b) Subject to the limitations set forth in Subparagraph (a) above,
nothing herein contained shall be construed to prevent Lender from exercising
and enforcing any other remedy allowed at law or in equity or by any statute or
by the terms of any of the Loan Documents.

          (c) Notwithstanding the foregoing provisions of Subparagraphs (a) and
(b) above, or any provision of the Deed of Trust or any other Loan Document to
the contrary, no limitation of liability set forth herein, in the Deed of Trust
or in any other Loan Documents shall be deemed to limit any right Lender might
otherwise have to obtain injunctive relief against Borrower or any partner of
Borrower related to the Leasehold Interest or the Improvements or any personal
property security or to take any action to preserve, enforce or foreclose the
liens, mortgages, assignments and security interests now or at any time
hereafter securing the payment and performance of all sums and obligations
hereunder or any of the Loan Documents, or to collect rents or to collect
amounts which may become owing or payable under or on account of insurance,
condemnation awards or damages for other public actions or surety bonds
maintained or provided by Borrower.

          (d) In addition to the foregoing provisions of this Section 9.29,
neither the limitation of liability set forth herein, or in the Deed of Trust or
any other Loan Document:

              (i) shall apply to any damages sustained by Lender by reason of:

                  (A) any misrepresentation by Borrower or any partner of
          Borrower proving to have been an intentional or fraudulent
          misrepresentation when made,

                  (B) waste or intentional damage to the Property or
          Improvements thereon by Borrower or any partner of Borrower,

                  (C) any breach of Borrower's obligations under Section 8.03
                                                                 ------------
          hereof,

                  (D) the failure of Borrower or any partner of Borrower to
          pay any income or other taxes, assessments or charges attributable to
          the Borrower or such partner (as the case may be) which can create
          liens on any portion of the Leasehold Interest or Improvements (to the
          full extent of any such taxes, assessments or other charges) as to
          Borrower or the partner who fails to pay such taxes, assessments or
          charges, or

                                      -28-
<PAGE>
 
                  (E) the making of any payment or any distribution (cash,
          profits, fees or otherwise) of any assets of Borrower to any partner
          of Borrower or to any affiliate of a partner of Borrower without the
          prior written consent of Lender; and

               (ii) shall apply should Borrower, or any partner of Borrower,
     claim or contend at any time that the Deed of Trust securing the Loan is,
     for any reason, invalid or unenforceable to an extent that would:

                  (A) preclude Lender from foreclosing the Deed of Trust or
          causing a trustee's sale in connection with the Deed of Trust upon the
          occurrence of a Default hereunder, or

                  (B) preclude Lender from foreclosing or otherwise enforcing
          its security interest in the personal property covered by the Deed of
          Trust or the Security Agreement upon the occurrence of a Default
          hereunder.

          (e) Nothing herein contained shall limit or be construed to limit the
personal liability and obligations of Borrower in the event that and to the
extent that after a Default or an event or circumstance that with the passage of
time, the giving of notice, or both, could constitute a Default, Borrower
collects any rents, issues or profits of the Leasehold Interest or the
Improvements or derived from the Leasehold Interest or the Improvements and does
not apply the same to the normal operating expenses of the Leasehold Interest or
the Improvements or any payments due under any of the Loan Documents, it being
intended hereby that Borrower shall be personally liable and obligated hereunder
to the full extent of such rentals and other items so collected and not so
applied, and that Lender or other holder hereof or of the Note, the Original
Note or any of the Loan Documents shall not be limited in any way in enforcing
such personal liability and obligations of Borrower.

                                      -29-
<PAGE>
 
     IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of
the date appearing on the first page of this Agreement.

"Lender"                              "Borrower"

NEW ENGLAND LIFE                      WILLOWS CONCORD VENTURE,
PENSION PROPERTIES' A Real            a California limited partnership,
Estate Limited Partnership,
a Massachusetts limited
partnership                           By:/s/ WILLIAM J. THORMAHLEN
                                         -------------------------
                                      Name:  WILLIAM J. THORMAHLEN
                                            ----------------------    
                                      Title:    GENERAL PARTNER
                                            ----------------------


By:  Copley Properties Company, Inc.

     By:/s/ WESLEY M. GARDINER
        ----------------------
        Name:  Wesley M. Gardiner
              -------------------
        Title: Vice President
              -------------------

NEW ENGLAND LIFE PENSION
PROPERTIES, II; A Real Estate Limited
Partnership, a Massachusetts limited
partnership

By:  Copley Properties Company II, Inc.

     By: /s/ WESLEY M. GARDINER
        ------------------------
        Name:  Wesley M. Gardiner
              -------------------
        Title: Vice President
              -------------------

                                      -30-
<PAGE>
 
                                   EXHIBIT A
                                   ---------

                               LEGAL DESCRIPTION
                               -----------------

     That certain real property located in the City of Concord, County of Contra
Costa, State of California, described as follows:

          Parcel "B" as shown on the Parcel Map filed April 22, 1969, in Book 8
     of Parcel Maps at Page 16, Contra Costa County Records (hereinafter, the
     "Site").

          Excepting therefrom the interest to Contra Costa County Flood Control
     and Water Conservation District, in the Deed recorded May 16, 1969, in Book
     5876, Page 838, of Official Records.

     ALSO EXCEPTING THEREFROM the buildings, structures and improvements now or
     hereafter erected on the Site, and any replacements thereof, which are and
     shall remain real property (collectively, the "Improvements"), and the
     furnishings, equipment, machinery and other items of personal property now
     or hereafter necessary for the property operation and maintenance of the
     Improvements and situated on, over or beneath the Site.
 

<PAGE>
 
                                   EXHIBIT B
                                                              05/17/95 10:35 PM 

The Willows
Section VII - 1994 & 1995 Summary   1995
Prepared By:
Ginger Bryant

<TABLE> 
<CAPTION> 
                                     Actual          Actual          Actual          Actual
                                      Jan             Feb             Mar             Apr            May             Jun            
--------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>             <C>             <C>             <C>             <C>            
Rental Income                        215,188         198,598         176,675         224,225         190,544         170,610        
--------------------------------------------------------------------------------------------------------------------------------
CAM, Taxes and Insurance              47,369          44,817          54,995          27,523          42,032          46,920
--------------------------------------------------------------------------------------------------------------------------------
Other Income                             113             585             263             638             250             250
--------------------------------------------------------------------------------------------------------------------------------
Total Revenues                       262,670         244,000         231,933         252,386         232,827         217,780
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Repairs and Maintenance                  652           3,938          11,165           9,454           3,006           3,025
--------------------------------------------------------------------------------------------------------------------------------
Parking Lot                            1,911               0           1,040             520             740             740
--------------------------------------------------------------------------------------------------------------------------------
Landscaping                             (100)         11,350          12,849           5,675          11,175          10,776
--------------------------------------------------------------------------------------------------------------------------------
Utilities                                 60           4,358           5,931           4,521          12,000           4,000
--------------------------------------------------------------------------------------------------------------------------------
HVAC                                       0               0               0               0               0               0
--------------------------------------------------------------------------------------------------------------------------------
Janitorial and Trash                       0          19,428          16,972           5,792          21,100          13,600
--------------------------------------------------------------------------------------------------------------------------------
Security and Other                     2,336          12,226          16,657           5,894          12,510           8,585
--------------------------------------------------------------------------------------------------------------------------------
Total CAM                              4,859          51,300          64,514          31,856          60,631          40,676
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Property Taxes                             0          27,000          54,000         (27,289)         27,018          27,018
--------------------------------------------------------------------------------------------------------------------------------
Insurance                              1,647           1,647           1,647           1,647           1,647           1,647
--------------------------------------------------------------------------------------------------------------------------------
Management Fees                        8,878           7,546           6,930           8,160           6,994           6,543
--------------------------------------------------------------------------------------------------------------------------------
Management Salaries                    6,191           7,149           9,385           4,156           7,264           7,264
--------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses              21,575          94,642         136,576          18,630         103,464          83,148
--------------------------------------------------------------------------------------------------------------------------------    

--------------------------------------------------------------------------------------------------------------------------------
Marketing                                850           1,093             368           1,026           6,914           8,296    
--------------------------------------------------------------------------------------------------------------------------------
Professional Services                 10,071           1,983           2,141           5,686           2,000           2,000
--------------------------------------------------------------------------------------------------------------------------------
Administrative                         5,358           1,349           9,460           3,930           3,525           4,639
--------------------------------------------------------------------------------------------------------------------------------
Bad Debt                                   0            (609)           (305)           (305)           (305)           (305)
--------------------------------------------------------------------------------------------------------------------------------
Total Expenses                        37,654          98,458         148,240          28,667         115,588          97,778
--------------------------------------------------------------------------------------------------------------------------------
Net Operating Income                 224,616         145,542          83,693         223,619         117,238         120,003
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Interest Paid                              0               0               0               0               0               0
--------------------------------------------------------------------------------------------------------------------------------
Other Expenses Paid                        0               0               0             800               0               0
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Tenant Improvements/Vanilla         (105,503)        (22,618)        (10,443)         (2,775)        (46,000)       (124,000)
--------------------------------------------------------------------------------------------------------------------------------
Leasing Commissions                    7,172          (4,292)         (2,880)        (13,947)        (34,435)        (12,000)
--------------------------------------------------------------------------------------------------------------------------------
Renovation and Replacements          (80,902)        (54,309)          2,139          (5,464)              0         (60,000)
--------------------------------------------------------------------------------------------------------------------------------
Total Capital                       (179,233)        (81,219)        (11,164)        (22,186)        (80,435)       (196,000)
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Loan/Other Funding                   308,165               0               0          49,380        (250,000)        (17,000)
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Cash Accrual Adjustments            (185,520)       (338,603)         73,913        (153,808)         27,018         142,583
--------------------------------------------------------------------------------------------------------------------------------
Net Cash Flow                        168,245        (274,280)        146,422          96,105        (186,179)         49,586
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Beginning Cash                       170,606         338,854          64,575         210,997         307,103         120,924
--------------------------------------------------------------------------------------------------------------------------------
Ending Cash                          338,854          64,575         210,997         307,103         120,924         170,509
--------------------------------------------------------------------------------------------------------------------------------

Target Working Capital                                                50,000          50,000          50,000          50,000
Property Tax Reserve                                                 135,000               0          27,000          54,000
Excess/Funding Need                                                   25,997         257,103          43,924          66,509
Cumulative Funding                   308,185         308,185         308,185         357,565         357,565         357,565
Balance in Coplay Cash account             0               0               0               0         250,000         267,000

Potential Pad B REG pyml                
Potential Pad B costs above demo (in T/S)
</TABLE> 
<TABLE> 
<CAPTION>                        
                                      Jul             Aug             Sep            Oct            Nov             Dec            
--------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>             <C>             <C>             <C>             <C>            
Rental Income                        189,076         212,876         194,200         216,400         205,150         217,875    
--------------------------------------------------------------------------------------------------------------------------------
CAM, Taxes and Insurance              43,715          47,050          49,212          49,931          54,053          64,291
--------------------------------------------------------------------------------------------------------------------------------
Other Income                             250             250             250             250             250             250
--------------------------------------------------------------------------------------------------------------------------------
Total Revenues                       233,041         260,176         243,663         266,682         259,453         282,416
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Repairs and Maintenance                2,506           2,654           2,878           6,665           4,518           5,037
--------------------------------------------------------------------------------------------------------------------------------
Parking Lot                            3,740             740             740             920             920             920
--------------------------------------------------------------------------------------------------------------------------------
Landscaping                            7,225           8,375           9,766           5,725           6,225           9,616
--------------------------------------------------------------------------------------------------------------------------------
Utilities                             12,000           4,000          12,000           4,300          10,500           5,500
--------------------------------------------------------------------------------------------------------------------------------
HVAC                                       0               0               0               0               0               0
--------------------------------------------------------------------------------------------------------------------------------
Janitorial and Trash                  13,600          13,600          13,600          14,100          14,100          14,100
--------------------------------------------------------------------------------------------------------------------------------
Security and Other                     8,960           8,510           8,585           8,510           8,960           9,485
--------------------------------------------------------------------------------------------------------------------------------
Total CAM                             48,031          37,879          47,669          40,220          47,223          44,668
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Property Taxes                        27,018          27,018          27,018          27,018          27,018          27,018
--------------------------------------------------------------------------------------------------------------------------------
Insurance                              1,647           1,647           1,729           1,729           1,729           1,729
--------------------------------------------------------------------------------------------------------------------------------
Management Fees                        7,000           7,814           7,319           8,007           7,793           8,482
--------------------------------------------------------------------------------------------------------------------------------
Management Salaries                    7,264           7,264           7,264           7,264           7,264          13,832
--------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses              90,961          61,622          90,898          84,238          91,026          96,718
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Marketing                              1,149           3,617           2,671           2,639           9,921          11,171
--------------------------------------------------------------------------------------------------------------------------------
Professional Services                  2,000           2,000           2,000           2,000           5,000           2,000
--------------------------------------------------------------------------------------------------------------------------------
Administrative                         3,525           3,501           4,463           3,501           3,975           4,439
--------------------------------------------------------------------------------------------------------------------------------
Bad Debt                                (305)           (305)           (305)           (305)           (305)           (305)
--------------------------------------------------------------------------------------------------------------------------------
Total Expenses                        97,330          90,436          89,727          92,073         109,617         113,023
--------------------------------------------------------------------------------------------------------------------------------
Net Operating Income                 136,710         169,740         143,936         174,609         149,836         169,393
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Interest Paid                              0               0               0               0               0               0
--------------------------------------------------------------------------------------------------------------------------------
Other Expenses Paid                        0               0               0               0               0               0
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Tenant Improvements/Vanilla         (165,000)       (300,000)       (559,150)       (356,250)       (198,400)        (32,000)
--------------------------------------------------------------------------------------------------------------------------------
Leasing Commissions                  (13,150)        (46,000)        (26,348)        (55,250)        (45,435)        (54,500)
--------------------------------------------------------------------------------------------------------------------------------
Renovation and Replacements          (20,000)              0               0               0               0               0
--------------------------------------------------------------------------------------------------------------------------------
Total Capital                       (198,150)       (346,000)       (685,498)       (411,500)       (243,835)        (66,500)
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Loan/Other Funding                    57,000          53,000         157,000         426,000         222,000          94,000
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Cash Accrual Adjustments              29,168         174,868         266,516        (146,980)       (140,647)       (292,425)
--------------------------------------------------------------------------------------------------------------------------------
Net Cash Flow                         23,728          61,608         (16,047)         42,029         (12,646)       (116,632)
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Beginning Cash                       170,509         194,238         245,846         227,800         269,829         257,183
--------------------------------------------------------------------------------------------------------------------------------
Ending Cash                          194,238         245,846         227,800         269,829         257,183         141,651
--------------------------------------------------------------------------------------------------------------------------------
                                             
Target Working Capital                50,000          50,000          50,000          50,000          50,000          50,000
Property Tax Reserve                  81,000         108,000         135,000         135,000          27,000          54,000
Excess/Funding Need                   63,238          87,846          42,800          84,829         180,183          37,651
Cumulative Funding                   357,565         357,565         357,565         783,565       1,005,565       1,099,565
Balance in Coplay Cash account       210,000         157,000               0               0               0               0  
                                                                                                                
Potential Pad B REG pyml             250,000  
Potential Pad B costs above demo (in T/S)                                                                         (1,350,000)
</TABLE> 
<TABLE> 
<CAPTION>                       
                                                    Current Yr.
                                      Total          Forecast         Change
------------------------------------------------------------------------------
<S>                                 <C>             <C>               <C>     
Rental Income                       2,411,421       2,565,726        (154,304)
------------------------------------------------------------------------------
CAM, Taxes and Insurance              571,908         624,826         (52,917)
------------------------------------------------------------------------------
Other Income                            3,599           3,000             599 
------------------------------------------------------------------------------
Total Revenues                      2,986,929       3,193,561        (206,623)
------------------------------------------------------------------------------

------------------------------------------------------------------------------
Repairs and Maintenance                55,497          45,180          10,316 
------------------------------------------------------------------------------
Parking Lot                            12,931          12,960             (29)
------------------------------------------------------------------------------
Landscaping                           100,607          99,624             983 
------------------------------------------------------------------------------
Utilities                              79,170          90,400         (11,230)
------------------------------------------------------------------------------
HVAC                                        0               0               0 
------------------------------------------------------------------------------
Janitorial and Trash                  159,992         164,700          (1,232)
------------------------------------------------------------------------------
Security and Other                    111,218         109,120           2,098 
------------------------------------------------------------------------------
Total CAM                             619,416         621,964             908 
------------------------------------------------------------------------------

------------------------------------------------------------------------------
Property Taxes                        269,855         401,395        (131,540)
------------------------------------------------------------------------------
Insurance                              20,093          20,094              (1)
------------------------------------------------------------------------------
Management Fees                        91,465          95,657          (4,191)
------------------------------------------------------------------------------
Management Salaries                    91,559          95,098          (3,539)
------------------------------------------------------------------------------
Total Operating Expenses              992,388       1,134,227        (138,363)
------------------------------------------------------------------------------

------------------------------------------------------------------------------
Marketing                              49,714          51,257          (1,543)
------------------------------------------------------------------------------
Professional Services                  38,378          37,500             878 
------------------------------------------------------------------------------
Administrative                         51,668          50,829             839 
------------------------------------------------------------------------------
Bad Debt                               (3,659)          5,000          (8,659)
------------------------------------------------------------------------------
Total Expenses                      1,126,489       1,278,813        (146,848)
------------------------------------------------------------------------------
Net Operating Income                1,868,440       1,914,738         (59,774)
------------------------------------------------------------------------------

------------------------------------------------------------------------------
Interest Paid                               0              (0)              0 
------------------------------------------------------------------------------
Other Expenses Paid                       800               0             800 
------------------------------------------------------------------------------

------------------------------------------------------------------------------
Tenant Improvements/Vanilla        (1,922,139)     (1,928,150)          6,011 
------------------------------------------------------------------------------
Leasing Commissions                  (301,065)       (394,900)         93,835 
------------------------------------------------------------------------------
Renovation and Replacements          (218,536)       (200,000)        (18,536)
------------------------------------------------------------------------------
Total Capital                      (2,441,740)     (2,523,060)         81,310 
------------------------------------------------------------------------------

------------------------------------------------------------------------------
Loan/Other Funding                  1,099,565               0       1,099,565 
------------------------------------------------------------------------------

------------------------------------------------------------------------------
Cash Accrual Adjustments             (543,917)              0        (543,917)
------------------------------------------------------------------------------
Net Cash Flow                         (28,452)       (606,312)        676,384 
------------------------------------------------------------------------------

---------------------------------------------
Beginning Cash                        170,606
----------------------------------------------
Ending Cash                           142,154
----------------------------------------------
                                
Target Working Capital           
Property Tax Reserve             
Excess/Funding Need              
Cumulative Funding               
Balance in Coplay Cash account   
                                                   before    
Potential Pad B REG pyml                           contingency
Potential Pad B costs above demo  (in T/S)          2,199,565 
</TABLE> 
<PAGE>
 
                                PROMISSORY NOTE
                                ---------------



     1.  Defined Terms.  As used in this Promissory Note (this "Note"), the
         -------------                                                     
following terms shall have the following meanings:

         Accrual Balance shall have the meaning assigned to it in Paragraph
         ---------------                                                   
3(a)(ii).

         Accrued Amount  shall have the meaning assigned to it in Paragraph
         --------------                                                    
3(a)(ii).

         Assignment of Leases  shall mean that certain Assignment of Leases and
         --------------------                                                  
Rents dated as of June 13, 1991, executed by Maker in favor of Lender, recorded
on June 18, 1991 as Instrument No. 91-110715 in the Official Records of Contra
Costa County, California, as amended by that certain Modification Agreement and
First Amendment to Loan Documents dated as of August 15, 1991, as further
amended by that certain Modification Agreement and Second Amendment to Loan
Documents dated as of September 12, 1991, as further amended by that certain
Modification Agreement and Third Amendment to Loan Documents dated as of October
15, 1991, as further amended by that certain Fourth Amendment to Loan Documents
dated as of December 17, 1992, and as further amended by that Fifth Amendment to
Loan Documents (as defined herein).

         Date of Disbursement  shall mean the date of this Note.
         --------------------                                   

         Deed of Trust shall mean that certain Deed of Trust and Security
         -------------
Agreement dated as of June 13, 1991, by Maker, as Trustor, to Chicago Title
Company, as Trustee, for the benefit of Lender, recorded in June 18, 1991 as
Instrument No. 91-116714 in the Official Records of Contra Costa County,
California, as amended by that certain Modification Agreement and First
Amendment to Loan Documents dated as of August 15, 1991, as further amended by
that certain Modification Agreement and Second Amendment to Loan Documents dated
as of September 12, 1991, as further amended by that certain Modification
Agreement and Third Amendment to Loan Documents dated as of October 15, 1991, as
further amended by that certain Fourth Amendment to Loan Documents dated as of
December 17, 1992, and as further amended by the Fifth Amendment to Loan
Documents (as defined herein).

         Fifth Amendment to Loan Documents shall mean that certain Fifth
         ---------------------------------
Amendment to Loan Documents of even date herewith by and between Maker and
Lender.
<PAGE>
 
     Fiscal Year  shall mean the calendar year.  As used in this Note, a Fiscal
     -----------                                                               
Year shall include any partial Fiscal Year at the beginning and end of the term
of this Note.

     Ground Lease  shall mean that certain Amended and Completely Restated
     ------------                                                         
Ground Lease effective as of June 18, 1991 by and between Maker, as ground
tenant, and Lender, as ground landlord.

     Improvements  shall mean the shopping center and any and all other
     ------------                                                      
improvements located on the Property.

     Interest Rate shall mean eleven percent (11%) per annum compounded monthly.
     -------------                                                              

     Leasehold Interest  shall mean Maker's leasehold interest under the Ground
     ------------------                                                        
Lease.

     Lender  shall mean New England Life Pension Properties; A Real Estate
     ------                                                               
Limited Partnership, and New England Life Pension Properties II; A Real Estate
Limited Partnership, each a Massachusetts limited partnership, together with
their respective successors and assigns (collectively referred to herein as
"Lender").

     Loan  shall mean the loan in the amount of the Principal Sum made by Lender
     ----                                                                       
to Maker pursuant to the Loan Agreement.

     Loan Agreement  shall mean that certain Construction Loan Agreement by and
     --------------                                                            
between Maker and Lender of even date herewith.

     Maker  shall mean Willows Concord Venture, a California limited
     -----                                                          
partnership, having an address at 18802 Bardeen Avenue, Irvine, California
92715.

     Maturity Date  shall mean December 31, 1997.
     -------------                               

     Net Operating Cash Flow shall have the meaning assigned to it in Paragraph
     -----------------------                                                   
3(a)(iii).

     Operating Expenses shall have the meaning assigned to it in Paragraph
     ------------------                                                   
3(a)(iv).

     Original Note  shall mean that certain Amended and Restated Promissory Note
     -------------                                                              
effective as of June 14, 1991 made by Maker in favor of Lender in the principal
amount of Fourteen 

                                      -2-
<PAGE>
 
Million Eight Hundred Sixty Three Thousand Two Hundred Six and 38/100 Dollars
($14,863,206.38), which Original Note replaced and superseded in its entirety
that certain Promissory Note dated June 14, 1991 made by Maker in favor of
Lender in the principal amount of Fourteen Million Eight Hundred Sixty Three
Thousand Two Hundred Six and 38/100 Dollars ($14,863,206.38).

     Principal Sum  shall mean $2,500,000.00.
     -------------                           

     Property  shall mean the real property located in the County of Contra
     --------                                                              
Costa, State of California and more particularly described in Exhibit A to the
                                                              ---------       
Deed of Trust.

     Security Agreement  shall mean that certain Security Agreement of even date
     ------------------                                                         
herewith executed by Maker in favor of Lender.

     Any initially-capitalized terms used and not otherwise defined herein shall
have the meanings given to such terms in the Deed of Trust.

     2.  Debt.  FOR VALUE RECEIVED, Maker promises to pay upon the Maturity Date
         ----                                                                   
to the order of Lender the unpaid portion of the Principal Sum, together with
interest on the unpaid principal from the Date of Disbursement to the Maturity
Date at the Interest Rate, in accordance with the terms hereof.  Interest
payable hereunder shall be calculated on the basis of a 365-day year.

     3.  Payments of Interest and Principal.
         ---------------------------------- 

     (a) Time and Method of Payment.
         -------------------------- 

               (i) If the Disbursement Date does not occur on the first day of a
     month, there shall be paid on the first day of the first month following
     the Disbursement Date, for the period commencing on the Disbursement Date
     and ending on and including the last day of the month in which the
     Disbursement Date occurs, interest only on the portion of the Principal Sum
     disbursed on the Disbursement Date at the Interest Rate.  Thereafter,
     subject to Paragraph 3(a)(ii) below, Maker shall pay the Principal Sum to
     Lender, together with interest thereon calculated in arrears, in monthly
     installments commencing on the first day of the second month following the
     Disbursement Date and continuing on the first day of each month thereafter
     until the Maturity Date.  Each installment shall be in an amount sufficient
     to amortize the Principal Sum in equal payments based upon a fifteen (15)
     year 

                                      -3-
<PAGE>
 
     amortization schedule at the Interest Rate, which schedule shall be deemed
     to have commenced on the first day of the first month following the
     Disbursement Date regardless of the date of any subsequent disbursement of
     the Principal Sum by Lender under the Loan Agreement. Lender shall
     recalculate the amount of such monthly installments after each disbursement
     of the Principal Sum under the Loan Agreement.

               (ii) Notwithstanding the provisions of Paragraph 3(a)(i) above,
     until January 1, 1996 Maker shall be required to make monthly installments
     of interest and principal due to Lender only from and to the extent of Net
     Operating Cash Flow realized by Maker for any month ending prior to January
     1, 1996.  Each such monthly installment (or portion thereof) of interest
     and principal which is not paid by Maker when due in accordance with the
     foregoing sentence shall accrue interest at the Interest Rate from the date
     the same was due.  The total of all such unpaid monthly installments (or
     portions thereof), together with all interest accruals thereon, shall be
     referred to herein as the "Accrued Amount."  The Accrued Amount, or any
     portion thereof remaining unpaid at any time and from time to time during
     the term of this Note (the "Accrual Balance") shall bear interest at the
     Interest Rate until fully repaid by Maker to Lender.  At any time and from
     time to time up to the Maturity Date, Maker may pay the then outstanding
     Accrual Balance to Lender, in whole or in part.  Notwithstanding the
     foregoing, Maker hereby agrees to apply all Net Operating Cash Flow
     realized by Maker for any month during the term of this Note (in excess of
     the amount required to be paid pursuant to the first sentence of this
     Paragraph 3(a)(ii)) (A) to reduce the outstanding Accrual Balance until
     paid in full, and (B) after the outstanding Accrual Balance has been paid
     in full, to reduce the outstanding Principal Sum.  In all events, the
     Principal Sum, including any Accrual Balance, remaining unpaid on the
     Maturity Date shall be paid to Lender in full on the Maturity Date.

               (iii)  Net Operating Cash Flow.  For purposes of this Note, the
                      -----------------------                                 
     term "Net Operating Cash Flow" shall mean, as to any particular Fiscal Year
     or portion thereof, the difference between (i) the aggregate of all fixed,
     minimum and guaranteed rents, fees, overage rents, percentage or
     participation rents and all rents and receipts from licenses and
     concessions received from the Property, including all amounts received for
     parking and all fees, income and revenue of a non-rental nature received by
     Maker during such Fiscal 

                                      -4-
<PAGE>
 
     Year, less (ii) Operating Expenses, capital expenditures and reserves
     therefor (to the extent permitted by Lender under the Loan Agreement), cost
     of tenant improvements, payments of principal, interest, loan fees or other
     charges or amounts on the Original Note which are paid by Maker during such
     Fiscal Year, all payments by Maker to Lender under the Ground Lease, and a
     reasonable reserve as determined by Maker to cover such expenses in the
     following Fiscal Year, all as determined on a cash accounting basis. Net
     Operating Cash Flow shall be computed by Maker on a monthly basis.

               (iv) Definition of Operating Expenses.  "Operating Expenses"
                    --------------------------------                       
     shall mean all reasonable and necessary charges and expenses actually
     incurred by Maker for the maintenance, protection, management and operation
     of the Property in the manner required by the Ground Lease and consistent
     with the management and operation of like properties in the Greater San
     Francisco area, and shall include, but not be limited to:

                    (A) normal, prevailing wages, salaries, and fringe benefits
          and payroll taxes for on-site personnel engaged in the operation of
          the Property (excluding home office personnel);

                    (B) a management fee not in excess of the "Maximum
          Management Fee", if, in fact, such fee is incurred, plus the actual
          cost of on-site management.  The "Maximum Management Fee" shall be
          three percent (3%) of gross collected revenue;

                    (C) payment of utilities, maintenance supplies, real estate
          taxes, betterments and assessments (but not income taxes or interest
          paid on taxes), cleaning, repairs, insurance, ordinary accounting,
          auditing and legal fees, interest paid to others on funds held in
          escrow, ordinary advertising;

                    (D) normal, prevailing brokerage commissions payable to
          third parties; and

                    (E) expenses incurred for replacement of capital
          improvements and reserves therefor (to the extent permitted by Lender
          under the Loan Agreement).

          "Operating Expenses" shall not include depreciation or any other non-
          cash costs.

                                      -5-
<PAGE>
 
          (b) Maturity Date.  On the Maturity Date, Maker shall pay to Lender
              -------------                                                  
the entire then unpaid and outstanding Principal Sum, together with any accrued,
unpaid interest hereunder (including, without limitation any outstanding Accrual
Balance).

     4.   Books and Records, Reports and Audits.  During the term of this Note,
          -------------------------------------                                
Maker shall maintain books and records and cause reports and audits to be
prepared in accordance with the provisions of the Deed of Trust.

     5.   Additional Interest.  All expenditures by Lender pursuant to this Note
          -------------------                                                   
or the other Loan Documents which are not reimbursed by Maker immediately upon
demand, all amounts remaining due and unpaid after the Maturity Date and any
amounts due and unpaid after an Event of Default shall bear interest at the rate
of five percent (5%) per annum more than the Interest Rate, until such amounts
are paid to Lender.

     6.   Manner and Place of Payment.  All payments hereunder shall be made in
          ---------------------------                                          
lawful money of the United States of America, in immediately available funds, at
399 Boylston Street, Boston, Massachusetts 02116, c/o Copley Real Estate
Advisors, Inc., or at such other place as Lender may from time to time designate
in writing.

     7.   Application of Payments.  Unless an Event of Default has occurred and
          -----------------------                                              
is continuing, all payments hereunder shall be applied first to costs of
collection or enforcement and other similar amounts due, if any, under this Note
and the other Loan Documents, then to any accrued, unpaid interest due under the
Note (including, without limitation, any outstanding interest included in the
Accrual Balance), and then to the outstanding Principal Sum (including any
portion of the Principal Sum included in the Accrual Balance).  If an Event of
Default has occurred and is continuing, such payments may be applied to sums due
hereunder or under the Loan Documents in any order and combination that Lender
may, in its sole discretion, determine.

     8.   Waivers.  Other than as expressly provided herein with respect to
          -------                                                          
notice and cure rights, Maker waives presentment for payment, demand, notice of
nonpayment, notice of intention to accelerate the maturity of this Note,
diligence in collection, commencement of suit against any obligor, notice of
protest, and protest of this Note and all other notices in connection with the
delivery, acceptance, performance, default or enforcement of the payment of this
Note, before or after maturity of this Note, with or without notice to Maker,
and agrees that its liability shall 

                                      -6-
<PAGE>
 
not be in any manner affected by any indulgence, extension of time, renewal,
waiver or modification granted or consented to by Lender. Maker consents to any
and all extensions of time, renewals, waivers or modifications that may be
granted by Lender with respect to the payment or other provisions of this Note,
and to any substitution, exchange or release of the collateral for this Note, or
any part thereof, with or without substitution of said collateral.

     9.   No Usury.  Lender and Maker intend to comply at all times with
          --------                                                      
applicable usury laws.  If at any time such laws would ever render usurious any
amounts called for under this Note or the other Loan Documents, then it is
Maker's and Lender's express intention that Maker shall not be required to pay
interest on this Note at a rate in excess of the maximum lawful rate, that the
provisions of this Paragraph shall control over all other provisions or this
Note and the Loan Documents which may be in apparent conflict hereunder, that
such excess amount shall be immediately credited on the principal balance of
this Note (or, if this Note has been fully paid, refunded by Lender to Maker),
and the provisions hereof shall be immediately reformed and the amounts
thereafter collectible under this Note reduced, without the necessity of the
execution of any further documents, so as to comply with applicable usury laws,
but so as to permit the recovery of the fullest amount otherwise called for
under this Note.  Any such crediting or refund shall not cure or waive any
default by Maker under this Note or the other Loan Documents.  If at any time
following any reduction in the interest rate payable by Maker there remains
unpaid any principal amount under this Note and the maximum interest rate not
prohibited by applicable law is increased or eliminated, then the interest rate
payable under this Note shall be readjusted, to the extent not prohibited by
applicable law, so that the total dollar amount of interest payable hereunder
shall be equal to the dollar amount of interest which would have been paid by
Maker without giving effect to the reduction in interest resulting from
compliance with applicable usury laws.  Maker agrees that in determining whether
or not any interest payable under this Note or the other Loan Documents exceeds
the highest rate not prohibited by law, any non-principal payment (except
payments specifically stated in this Note or in the other Loan Documents to be
"interest"), shall, to the maximum extent not prohibited by law, be an expense,
fee, or premium rather than interest.  The term "applicable law" as used in this
Note shall mean the laws of the State of California, or the laws of the United
States, whichever laws allow the greater rate of interest, as such laws now
exist or may be changed or amended or come into effect in the future.

                                      -7-
<PAGE>
 
     10.  Remedies.  The rights and remedies of Lender are set forth in the Loan
          --------                                                              
Documents and include, without limitation, in case of an Event of Default, the
right to declare the outstanding Principal Sum and any accrued and unpaid
interest due under this Note (including, without limitation, any outstanding
Accrual Balance) immediately due and payable.

     11.  Amendments.  This Note may not be changed or amended orally but only
          ----------                                                          
by an agreement in writing, signed by the party against whom enforcement is
sought.

     12.  Governing Law.  This Note shall be governed and construed by the laws
          -------------                                                        
of the State of California.

     13.  Permitted Prepayment.  Maker may prepay the entire unpaid Principal
          --------------------                                               
Sum, with accrued and unpaid interest (including, without limitation, any
outstanding Accrual Balance), in whole or in part, at any time, without
prepayment penalty.  Unless Lender otherwise agrees, the amount of the monthly
installments of principal and interest payable hereunder shall not be reduced in
the event of any partial prepayment.

     14.  Non-Recourse Debt.
          ----------------- 

          (a) Maker shall be liable upon the indebtedness evidenced by this
Note, for all sums to accrue or to become payable thereunder, and for
performance of any covenants contained in any of the Loan Documents to the
extent, but only the extent, of Lender's security for the same, including,
without limitation, all properties, rights, estates, and interests covered by
the Loan Agreement and the Loan Documents.  No attachment, execution or other
writ of process shall be sought, issued or levied upon any assets, properties or
funds of Maker other than the properties, rights, estates and interest described
in Loan Agreement and the other Loan Documents.  In the event of foreclosure of
such title, liens, mortgages or security interests, by private power of sale or
otherwise, no judgment for any deficiency upon such indebtedness, sums and
amounts shall be sought or obtained by Lender against Maker.

          (b) Subject to the limitations set forth in Subparagraph (a) above,
nothing herein contained shall be construed to prevent Lender from exercising
and enforcing any other remedy allowed at law or in equity or by any statute or
by the terms of any of the Loan Documents.

                                      -8-
<PAGE>
 
          (c) Notwithstanding the foregoing provisions of Subparagraphs (a) and
(b) above, or of any provision of the Deed of Trust or any other Loan Document
to the contrary, no limitation of liability set forth herein, in the Deed of
Trust or in any other Loan Document shall be deemed to limit any right Lender
might otherwise have to obtain injunctive relief against Maker or any partner of
Maker related to the Leasehold Interest or the Improvements or any personal
property security or to take any action to preserve, enforce or foreclose the
liens, mortgages, assignments and security interests now or at any time
hereafter securing the payment and performance of all sums and obligations
hereunder or any of the Loan Documents, or to collect rents or to collect
amounts which may become owing or payable under or on account of insurance,
condemnation awards or damages for other public actions or surety bonds
maintained or provided by Maker.

          (d) In addition to the foregoing provisions of this Paragraph 14,
neither the limitation of liability set forth herein, or in the Deed of Trust or
any other Loan Document:

               (i) shall apply to any damages sustained by Lender by reason of:

                    (A) any misrepresentation by Maker or any partner of Maker
          proving to have been an intentional or fraudulent misrepresentation
          when made,

                    (B) waste or intentional damage to the Property or
          Improvements thereon by Maker or any partner of Maker,

                    (C) any breach of Maker's obligations under Section 8.03 of
                                                                ------------   
          the Loan Agreement,

                    (D) the failure of Maker or any partner of Maker to pay any
          income or other taxes, assessments or charges attributable to the
          Maker or such partner (as the case may be) which can create liens on
          any portion of the Leasehold Interest or Improvements (to the full
          extent of any such taxes, assessments or other charges) as to Maker or
          the partner who fails to pay such taxes, assessments or charges, or

                    (E) the making of any payment or any distribution (cash,
          profits, fees or otherwise) of any assets of Maker to any partner of
          Maker or to any 

                                      -9-
<PAGE>
 
          affiliate of a partner of Maker without the prior written consent of
          Lender; and

               (ii) shall apply should Maker, or any partner of Maker, claim or
     contend at any time that the Deed of Trust securing the Loan is, for any
     reason, invalid or unenforceable to an extent that would:

               (A) preclude Lender from foreclosing the Deed of Trust or causing
     a trustee's sale in connection with the Deed of Trust upon the occurrence
     of a Default under the Loan Agreement, or

               (B) preclude Lender from foreclosing or otherwise enforcing its
     security interest in the personal property covered by the Deed of Trust or
     the Security Agreement upon the occurrence of a Default under the Loan
     Agreement.

          (e) Nothing herein contained shall limit or be construed to limit the
personal liability and obligations of Maker in the event that and to the extent
that after a Default or an event or circumstance that with the passage of time,
the giving of notice, or both, could constitute a Default, Maker collects any
rents, issues or profits of the Leasehold Interest or the Improvements or
derived from the Leasehold Interest or the Improvements and does not apply the
same to the normal operating expenses of the Leasehold Interest or the
Improvements or any payments due under any of the Loan Documents, it being
intended hereby that Maker shall be personally liable and obligated hereunder to
the full extent of such rentals and other items so collected and not so applied,
and that Lender or other holder hereof or of this Note, the Original Note or any
of the Loan Documents shall not be limited in any way in enforcing such personal
liability and obligations of Maker.

     15.  Security.  This Note is secured, in part, by the Deed of Trust, the
          --------                                                           
Assignment of Leases, the Security Agreement and all amendments, modifications,
supplements, substitutions, additions, renewals, replacements and extensions
thereof.

     16.  Collection.  Any check, draft, money order or other instrument given
          ----------                                                          
in payment of all or any portion hereof may be accepted by Lender and handled by
collection in the customary manner, but the same shall not constitute payment
hereunder or diminish any rights of Lender except to the extent that actual 

                                      -10-
<PAGE>
 
cash proceeds of such instrument are unconditionally received by Lender and
applied to this indebtedness in the manner elsewhere herein provided.

     17.  Attorneys' Fees.  Upon any Event of Default, Maker shall pay all costs
          ---------------                                                       
of collection, including without limitation, reasonable attorneys' fees and
expenses, whether or not suit is filed hereon.

     IN WITNESS WHEREOF, this Note has been executed and delivered of the 1st
day of January, 1995.

     "Maker"                  WILLOWS CONCORD VENTURE, a 
                              California limited partnership



                              By: /s/ John S. Hagestad
                                  ------------------------------
                                  John S. Hagestad
                                  Its: General Partner



                              By: /s/ Carl F. Willgeroth
                                  ------------------------------
                                  Carl F. Willgeroth
                                  Its: General Partner



                              By: /s/ William J. Thormahlen
                                  ------------------------------
                                  William J. Thormahlen
                                  Its: General Partner

                                      -11-
<PAGE>
 
                               SECURITY AGREEMENT
                               ------------------


     THIS SECURITY AGREEMENT ("Agreement") is entered into as of January 1,
1995, by WILLOWS CONCORD VENTURE, a California limited partnership ("Borrower"),
whose principal place of business is located at 18802 Bardeen Avenue, Irvine,
California 92715, in favor of NEW ENGLAND LIFE PENSION PROPERTIES; A REAL ESTATE
LIMITED PARTNERSHIP, and NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE
LIMITED PARTNERSHIP, each a Massachusetts limited partnership (collectively
"Lender").

                                   RECITALS
                                   --------

     A.   Borrower proposes to borrow from Lender, pursuant to the terms of that
certain Construction Loan Agreement (the "Loan Agreement") between Borrower and
Lender, dated as of the date of this Agreement, the principal sum of TWO MILLION
FIVE HUNDRED THOUSAND and 00/100THS DOLLARS ($2,500,000.00) (the "Loan") for the
purposes specified in the Loan Agreement and relating to the real property and
improvements described in the Loan Agreement (which property and improvements
are collectively referred to herein as the "Subject Property").  The Loan is
evidenced by a Promissory Note (the "Note") of Borrower payable to Lender in the
principal amount of the Loan and is secured by the Deed of Trust (as defined on
the Loan Agreement) on the Subject Property, the security interests granted
under this Agreement and any other security instruments specified in the Loan
Agreement.

     B.   The Loan Documents (as defined and described in the Loan Agreement)
include this Agreement, the Loan Agreement, the Deed of Trust, the Note, and the
Lease Assignment (as defined in the Loan Agreement).  Initially-capitalized
terms used and not otherwise defined herein shall have the meanings given to
such terms in the Loan Agreement.

     NOW, THEREFORE, in consideration of Lender's agreement to make the Loan,
Borrower agrees as follows:

     1.   Security interest.  Borrower grants and assigns to Lender as of the
          -----------------                                                  
Effective Date (as defined in the Loan Agreement) a security interest in all of
the following described personal property in which Borrower now or at any time
hereafter has any interest (collectively, the "Collateral"):

     All goods, building and other materials, supplies, work in progress,
     equipment, machinery, fixtures, furniture, furnishings, signs and other
     personal property, wherever 
<PAGE>
 
     situated, which are or are to be incorporated into, used in connection
     with, or appropriated for use on (i) the real property described on Exhibit
     A to the Deed of Trust or (ii) the improvements described in the Loan
     Agreement (which real property and improvements are collectively referred
     to herein as the Subject Property); together with all rents, issues,
     deposits and profits of the Subject Property; all inventory, accounts, cash
     receipts, deposit accounts (including, without limitation, demand deposit
     account no. 180206050 in the name of Willows Concord General Checking of
     the First Interstate Bank, 1018 North Main Street, Santa Ana, California
     982701 established pursuant to the Loan Agreement and demand deposit
     account no. 9364452404 of Fleet Bank, Boston, Massachusetts; accounts
     receivable, contract rights, general intangibles, chattel paper,
     instruments, documents, notes, drafts, letters of credit, insurance
     policies, insurance and condemnation awards and proceeds, any other rights
     to the payment of money, trade names, trademarks and service marks arising
     from or related to the Subject Property or any business now or hereafter
     conducted thereon by Borrower; all permits, consents, approvals, licenses,
     authorizations and other rights granted by, given by or obtained from, any
     governmental entity with respect to the Subject Property; all deposits or
     other security now or hereafter made with or given to utility companies by
     Borrower with respect to the Subject Property; all advance payments of
     insurance premiums made by Borrower with respect to the Subject Property;
     all plans, drawings and specifications relating to the Subject Property;
     all loan funds held by Lender, whether or not disbursed; all funds
     deposited with Lender pursuant to any loan agreement; all reserves,
     deferred payments, deposits, accounts, refunds, cost savings and payments
     of any kind related to the Subject Property or any portion thereof;
     together with all replacements and proceeds of, and additions and
     accessions to, any of the foregoing; together with all books, records and
     files relating to any of the foregoing.

     2.   Obligations Secured.  This Agreement secures the payment and
          -------------------                                         
performance of all present and future obligations of Borrower to Lender under
the Loan, that certain Amended and Restated Promissory Note dated effective as
of June 14, 1991 made by Borrower in favor of Lender in the principal amount of
$14,863,206.38, the other Loan Documents and under any other agreement which
recites that it is secured hereby.

     3.   Representations and Warranties.  Borrower represents and warrants
          ------------------------------                                   
that:  (a) Borrower has, or will have, good title to the Collateral; (b)
Borrower has not previously assigned or encumbered 

                                      -2-
<PAGE>
 
the Collateral to any person or entity other than Lender, and no financing
statement covering any of the Collateral has been delivered to any other person
or entity other than Lender; and (c) Borrower's principal place of business is
located at the address specified above.

     4.   Rights of Lender.  In addition to Lender's rights as a "Secured
          ----------------                                               
Party" under the California Uniform Commercial Code, as amended or recodified
from time to time ("UCC"), Lender may, but shall not be obligated to, at any
time without notice and at the expense of Borrower:  (a) give notice to any
person of Lender's rights hereunder and, upon the occurrence of a Default,
enforce such rights; (b) insure, protect, defend and preserve the Collateral or
any rights or interests of Lender therein; (c) inspect the Collateral; and (c)
endorse, collect and receive any right to payment of money owing to Borrower
under or from the Collateral.  Lender shall have no duty or obligation to make
or give any presentments, demands for performance, notice of nonperformance,
notice of protest or notices of dishonor in connection with any of the
Collateral.

     5.   Collateral Designation Statement.  Borrower shall, from time to
          --------------------------------                               
time within ten (10) days of Lender's request, deliver to Lender a written
statement showing the description and location of all Collateral then subject to
this Agreement.

     6.   Miscellaneous Undertakings.  In addition to Borrower's
          --------------------------                            
undertakings under the other Loan Documents, Borrower, at its sole cost and
expense, agrees to pay within fifteen (15) days of Lender's demand, all
expenses, including without limitation, reasonable attorneys' fees and court
costs, incurred by Lender in connection with the creation, perfection,
preservation or enforcement of any of the security interests granted under this
Agreement.

     7.   Default.  "Default" shall mean (i) the failure to perform any
          -------                                                      
obligation hereunder or the failure to be true of any representation or warranty
of Borrower herein, and the continuance of such failure for fifteen (15) days
after notice or within any longer grace period, if any, allowed in the Loan
Agreement for such failure, or (ii) the existence of any Default as defined in
the Loan Agreement.

     8.   Lender's Rights on Default.  Upon the occurrence of a Default
          --------------------------                                   
under this Agreement, then in addition to all of Lender's rights as a "Secured
Party" under the UCC or otherwise by law:

          8.1. Lender may (i) upon written notice, require Borrower to assemble
any or all of the Collateral and make it


                                      -3-
<PAGE>
 
available to Lender at a place designated by Lender; (ii) without prior notice,
enter upon the Subject Property or other place where any of the Collateral may
be located and take possession of, collect, sell, and dispose of any or all of
the Collateral, and store the same at locations acceptable to Lender at
Borrower's expense; (iii) sell, assign and deliver at any place or in any lawful
manner all or any part of the Collateral and bid and become purchaser at any
such sale; and

          8.2. Lender may, for the account of Borrower and at Borrower's
expense:  (i) operate, use, consume, sell or dispose of the Collateral as Lender
deems appropriate for the purpose of performing any or all of the obligations
secured by this Agreement; (ii) enter into any agreement, compromise, or
settlement, including insurance claims, which Lender may deem desirable or
proper with respect to any of the Collateral; (iii) endorse and deliver
evidences of title for, and receive, enforce and collect by legal action or
otherwise, all indebtedness and obligations now or hereafter owing to Borrower
in connection with or on account of any or all of the Collateral; and (iv)
perform any of the obligations secured by this Agreement.

          Notwithstanding any other provisions of this Agreement, Lender shall
not be deemed to have accepted any property other than cash in satisfaction of
any obligation of Borrower to Lender unless Lender shall make an express written
election of said remedy under UCC Section 9505, or other applicable law.

     9.   Power of Attorney.  Borrower hereby irrevocably appoints Lender as
          -----------------                                                 
Borrower's attorney-in-fact (such agency being coupled with an interest), and as
such attorney-in-fact lender may, without the obligation to do so, in Lender's
name or in the name of Borrower, prepare, execute and file or record financing
statements, continuation statements, applications for registration and like
papers necessary to create, perfect or preserve any of Lender's security
interests and rights in or to any of the Collateral, and, upon a Default
hereunder take any other action specified in Section 8 hereof; provided that
Lender as such attorney-in-fact shall be accountable only for such funds as are
actually received by Lender.

     10.   Possession and Use of Collateral.  Except as otherwise provided
           --------------------------------                               
in this Agreement or the other Loan Documents, so long as no Default exists
under this Agreement or any of the Loan Documents, Borrower may possess, use,
move, transfer or dispose of any of the Collateral in the ordinary course of
Borrower's business and in accordance with the Loan Agreement.

                                      -4-
<PAGE>
 
     11.   Integration.  This Agreement and the other Loan documents contain
           -----------                                                      
the entire agreement of the parties and supersede any and all prior
negotiations.  This Agreement is supplemented by those provisions of the Loan
Agreement which apply to the Loan Documents and said provisions are incorporated
herein by this reference.

     IN WITNESS WHEREOF, Borrower has executed this Security Agreement as of the
date appearing on the first page of this Agreement.

                                            "Borrower"

                                            WILLOWS CONCORD VENTURE
                                            a California limited partnership



                                            By: /s/ William J. Thormahlen
                                                --------------------------------
                                                Name: WILLIAM J. THORMAHLEN
                                                     ---------------------------
                                                Title: GENERAL PARTNER
                                                       -------------------------


                                      -5-
<PAGE>
 
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
NEW ENGLAND LIFE PENSION PROPERTIES II;
A REAL ESTATE LIMITED PARTNERSHIP
c/o Hale and Dorr
60 State Street
Boston, Massachusetts  02109
Attention:  Kenneth A. Hoxsie, Esq.

--------------------------------------------------------------------------------
                                         (Space Above For Recorder's Use)

                       FIFTH AMENDMENT TO LOAN DOCUMENTS
                       ---------------------------------


     THIS FIFTH AMENDMENT TO LOAN DOCUMENTS (this "Amendment") is entered into
as of the 1st day of January, 1995, by and between WILLOWS CONCORD VENTURE, a
California limited partnership ("Trustor"), and NEW ENGLAND LIFE PENSION
PROPERTIES; A REAL ESTATE LIMITED PARTNERSHIP, a Massachusetts limited
partnership, and NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE LIMITED
PARTNERSHIP, a Massachusetts limited partnership (collectively, "Beneficiary").


                               R E C I T A L S:
                               - - - - - - - -

     A.  Beneficiary has made a loan to Trustor in the principal amount of
Fourteen Million Eight Hundred Sixty-Three Thousand Two Hundred Six and 38/100
Dollars ($14,863,206.38) (the "Original Loan").  The Original Loan is evidenced
by that certain Amended and Restated Secured Promissory Note ("Original Note")
dated effective as of June 14, 1991 in the original principal amount of Fourteen
Million Eight Hundred Sixty-Three Thousand Two Hundred Six and 38/100 Dollars
($14,863,206.38).  The Original Note is secured by (i) that certain Deed of
Trust and Security Agreement dated as of June 13, 1991 by and among Trustor, as
trustor, Chicago Title Company, as trustee, and Beneficiary, as beneficiary, and
recorded on June 18, 1991 as Instrument No. 91-116714 in the Official Records of
Contra Costa County, California (the "Registry"), as amended by that certain
Modification Agreement and First Amendment to Loan Documents dated as of August
13, 1991 (the "First Amendment"), as further amended by that certain
Modification Agreement and Second Amendment to Loan Documents dated as of
September 12, 1991 (the "Second Amendment"), as further amended by that certain
Modification and Third 
<PAGE>
 
Amendment to Loan Documents dated as of October 15, 1991 (the "Third
Amendment"), and as further amended that certain Fourth Amendment to Loan
Documents (the "Fourth Amendment") dated as of December 17, 1992 recorded in the
Official Records of Contra Costa County, California as Instrument Nos. 93-
121110, 93-121111, 93-121112, 93-121113, respectively (as so amended, the
"Indenture") and (ii) that certain Assignment of Leases and Rents dated as of
June 13, 1991 executed by Trustor in favor of Beneficiary and recorded on June
18, 1991 as Instrument No. 91-116715 in the Official Records of Contra Costa
County, California, as amended by the First Amendment, the Second Amendment, the
Third Amendment and the Fourth Amendment (as so amended, the "Lease
Assignment"). The Indenture and the Lease Assignment encumber, among other
things, Trustor's leasehold interest under that certain Amended and Completely
Restated Ground Lease dated effective as of June 18, 1991 ("Ground Lease")
pursuant to which Beneficiary has leased to Trustor certain real property in
Contra Costa County, California, more particularly described on Exhibit "A"
                                                                -----------
attached to the Indenture (the "Property").  Except as otherwise provided in
this Amendment, all capitalized terms used herein without definition shall have
meanings given in the Indenture.

     B.  Beneficiary has made an additional loan to Trustor in the principal
amount of Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00)
(the "Construction Loan") pursuant to that certain Construction Loan Agreement
by and between Trustor and Beneficiary of even date herewith (the "Construction
Loan Agreement").  The Construction Loan is evidenced by a Promissory Note of
even date herewith in the principal amount of Two Million Five Hundred Thousand
and 00/100 Dollars ($2,500,000.00) (the "Construction Note").

     C.  Trustor and Beneficiary desire to amend the Indenture and the Lease
Assignment to, among other things, secure all of Trustor's obligations under the
Construction Note and the Construction Loan Agreement.

     NOW, THEREFORE, in consideration of the foregoing Recitals (which are
incorporated herein by this reference) and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Trustor and Beneficiary hereby agree as follows:



                              A G R E E M E N T:
                              - - - - - - - - -

     1.  Amendments to Indenture.  The Indenture is hereby amended as follows:
         -----------------------                                              

                                   -2-     
<PAGE>
 
     (a)   Cover Sheet.
           ----------- 

           (i)    The definition of the term "Trustor's Notice Address" is
                  deleted in its entirety from the Cover Sheet to the Indenture
                  and the following definition is hereby inserted in place
                  thereof:

                         "c/o Mr. William J. Thormahlen
                         Sares-Regis Group
                         18802 Bardeen Avenue
                         Irvine, California 92715-1521"

           (ii)   The definition of the term "Note Amount" is deleted in its
                  entirety from the Cover Sheet to the Indenture and the
                  following definitions are hereby inserted in place thereof:

                         "Original Note Amount:  $14,863,206.38

                         "Construction Note Amount: $2,500,000.00"

                  Any and all references in the Indenture to the term "Note
                  Amount" shall mean and refer jointly to the Original Note
                  Amount and the Construction Note Amount.

           (iii)  The definition of the term "Maturity Date" is hereby deleted
                  in its entirety from the Cover Sheet to the Indenture and the
                  following definitions are hereby inserted in place thereof:

                         "Maturity Date of Original Note:  June 18, 2001"

                         "Maturity Date of Construction Note:
                         December 31, 1997."

                  Any and all references in the Indenture to the "Maturity Date"
                  shall mean and refer jointly to the Maturity Date of the
                  Original Note and the Maturity Date of the Construction Note.

     (b)  Section 1.15 of the Indenture is hereby amended by deleting the
          definition of the term "Loan Documents" in its entirety and inserting
          the following definition in place thereof:


                                      -3-
<PAGE>
 
                  "Loan Documents: this Indenture, the Original Note, the
                  Construction Note, the Lease Assignment, the Construction Loan
                  Agreement, the Security Agreement and any and all other
                  documents or instruments related thereto or to the Secured
                  Debt now or hereafter given by or on behalf of Trustor to
                  Beneficiary."

     (c)  Section 1.16 of the Indenture is hereby amended by deleting the
          definition of the term "Note" in its entirety and inserting the
          following definitions in place thereof:

                  "Original Note:  that certain Amended and Restated
                   -------------                                    
                  Promissory Note dated effected as of June 14, 1991 made by
                  Trustor in favor of Beneficiary in the Original Note Amount
                  and all replacements, substitutions, modifications, renewals
                  and extensions thereof, which Original Note is payable on the
                  Maturity Date of the Original Note. The Original Note replaces
                  and supersedes in its entirety that certain Promissory Note
                  dated June 14, 1991 made by Trustor in favor of Beneficiary in
                  the principal amount of $14,863,206.83."

                  "Construction Note:  that certain Promissory Note dated as
                   -----------------                                        
                  of January 1, 1995 made by Trustor in favor of Beneficiary in
                  the Construction Note Amount, and all replacements,
                  substitutions, modifications, renewals and extensions thereof,
                  which Construction Note is payable on the Maturity Date of the
                  Construction Note."

                  "Notes:  the Original Note and the Construction Note."
                   -----                                                

                  Any and all references in the Indenture to the term "Note"
                  shall mean and refer jointly to the Notes.

     (d)  The following definition is hereby added as Section 1.32 of the
          Indenture:

                  "Loan Agreement:  that certain Construction Loan Agreement
                   --------------                                           
                  by and between Trustor and Beneficiary dated as of 
                  January 1, 1995."

                                      -4-
<PAGE>
 
     (e)  The following definition is hereby added as Section 1.33 of the
          Indenture:

                  "Security Agreement:  that certain Security Agreement by and
                   ------------------                                         
                  between Trustor and Beneficiary dated as of January 1,
                  1995."


     (f)  Section 4.5(b) of the Indenture is hereby amended by inserting the
          following at the end thereof:

                  "Notwithstanding the foregoing, Beneficiary shall not
                  unreasonably withhold or delay its consent to any (i)
                  distribution to any general or limited partner of Trustor of
                  its respective interest therein or (ii) assignment or transfer
                  by any general or limited partner of Trustor of its respective
                  interest so distributed to any person or entity controlling,
                  controlled by, or under common control with such general or
                  limited partner (each an "Affiliate"), provided that (A) such
                  distribution, assignment or transfer is made for the purpose
                  of accomplishing a tax free exchange under Section 1031 of the
                  Internal Reveue Code of 1986, as amended, and (B) any and all
                  such Affiliates agree to assume all of the liabilities and
                  obligations of Trustor and such general or limited partner to
                  Beneficiary pursuant to a written instrument satisfactory to
                  Beneficiary."

     (g)  Section 4.16 of the Indenture is hereby deleted in its entirety.

     (h)  Section 8.2 of the Indenture is hereby amended by deleting the
          grammatical paragraph next following subparagraph (l) in its entirety
          and inserting the following in place thereof:

                  "Any sums advanced by Beneficiary under this Paragraph 8.2
                  shall bear interest at the higher of the interest rates
                  specified in the Notes plus 2% per annum, shall be payable by
                  Trustor on demand, and together with such interest, shall
                  constitute part of the Secured Debt."

                                      -5-
<PAGE>
 
     (i)  Section 10.13 of the Indenture is hereby deleted in its entirety and
          the following new Section 10.13 is hereby inserted in place thereof:

                  "Non-Recourse Debt.
                   ----------------- 

                       (a) Trustor shall be liable upon the indebtedness
                    evidenced by the Notes, for all sums to accrue or to become
                    payable thereunder, and for performance of any covenants
                    contained in any of the Loan Documents to the extent, but
                    only the extent, of Beneficiary's security for the same,
                    including, without limitation, all properties, rights,
                    estates, and interests covered by the this Indenture and the
                    Loan Documents.  No attachment, execution or other writ of
                    process shall be sought, issued or levied upon any assets,
                    properties or funds of Trustor other than the properties,
                    rights, estates and interest described in this Indenture and
                    the other Loan Documents.  In the event of foreclosure of
                    such title, liens, mortgages or security interests, by
                    private power of sale or otherwise, no judgment for any
                    deficiency upon such indebtedness, sums and amounts shall be
                    sought or obtained by Beneficiary or Trustee against
                    Trustor.

                       (b) Subject to the limitations set forth in
                    Subparagraph (a) above, nothing herein contained shall be
                    construed to prevent Beneficiary from exercising and
                    enforcing any other remedy allowed at law or in equity or by
                    any statute or by the terms of any of the Loan Documents.

                       (c) Notwithstanding the foregoing provisions of
                    Subparagraphs (a) and (b) above, or of any provision of any
                    other Loan Document to the contrary, no limitation of
                    liability set forth herein or in any other Loan Document
                    shall be deemed to limit any right Beneficiary might
                    otherwise have to obtain injunctive relief against Trustor
                    or any partner of Trustor related to the Leasehold Interest
                    or the Improvements or any personal property security or to
                    take any action to preserve, enforce or foreclose the liens,
                    mortgages, assignments and security interests now or at

                                      -6-
<PAGE>
                    any time hereafter securing the payment and performance of
                    all sums and obligations hereunder or any of the Loan
                    Documents, or to collect rents or to collect amounts which
                    may become owing or payable under or on account of insurance
                    condemnation awards or damages for other public actions or
                    surety bonds maintained or provided by Trustor.
 
                       (d) In addition to the foregoing provisions of this
                    Section 10.13, neither the limitation of liability set forth
                    herein or any other Loan Document:

                       (i) shall apply to any damages sustained by Beneficiary
                    by reason of:

                           (A) any misrepresentation by Trustor or any partner
                    of Trustor proving to have been an intentional or fraudulent
                    misrepresentation when made,

                           (B) waste or intentional damage to the Property or
                    Improvements thereon by Trustor or any partner of Trustor,

                           (C) any breach of Trustor's obligations under
                    Section 8.03 of the Loan Agreement,
                    ------------                       

                           (D) the failure of Trustor or any partner of
                    Trustor to pay any income or other taxes, assessments or
                    charges attributable to the Trustor or such partner (as the
                    case may be) which can create liens on any portion of the
                    Leasehold Interest or Improvements (to the full extent of
                    any such taxes, assessments or other charges) as to Trustor
                    or the partner who fails to pay such taxes, assessments or
                    charges, or

                           (E) the making of any payment or any distribution
                    (cash, profits, fees or otherwise) of any assets of Trustor
                    to any partner of Trustor or to any affiliate of a partner
                    of Trustor without the prior written consent of Beneficiary;
                    and


                                      -7-
<PAGE>
 
                       (ii) shall apply should Trustor, or any partner of
                    Trustor, claim or contend at any time that this Indenture
                    is, for any reason, invalid or unenforceable to an extent
                    that would:

                           (A) preclude Beneficiary from foreclosing this
                    Indenture causing a trustee's sale in connection with this
                    Indenture upon the occurrence of an Event of Default, or

                           (B) preclude Beneficiary from foreclosing or
                    otherwise enforcing its security interest in the personal
                    property covered by this Indenture or the Security Agreement
                    upon the occurrence of an Event of Default.

                       (e) Nothing herein contained shall limit or be construed
                    to limit the personal liability and obligations of Trustor
                    in the event that and to the extent that after an Event of
                    Default or an event or circumstance that with the passage of
                    time, the giving of notice, or both, could constitute an
                    Event of Default, Trustor collects any rents, issues or
                    profits of the Leasehold Interest or the Improvements or
                    derived from the Leasehold Interest or the Improvements and
                    does not apply the same to the normal operating expenses of
                    the Leasehold Interest or the Improvements or any payments
                    due under any of the Loan Documents, it being intended
                    hereby that Trustor shall be personally liable and obligated
                    hereunder to the full extent of such rentals and other items
                    so collected and not so applied, and that Beneficiary or
                    other holder hereof or of either of the Notes or any of the
                    Loan Documents shall not be limited in any way in enforcing
                    such personal liability and obligations of Trustor."

     2.   Amendments to Lease Assignment.  The Lease Assignment is hereby
          ------------------------------                                 
amended as follows:

          (a)  Cover Sheet.
               ----------- 

               (i)   The definition of the term "Assignor's Notice of Address"
                     is deleted in its entirety from the Cover Sheet to the
                     Lease Assignment and the following definition is hereby
                     inserted in place thereof:

                                      -8-
<PAGE>
 
                         "c/o Mr. William J. Thormahlen
                         Sares-Regis Group
                         18802 Bardeen Avenue
                         Irvine, California 92715-1521"

               (ii)  The definition of the term "Note Amount" is hereby deleted
                     in its entirety from the Cover Sheet to the Lease
                     Assignment and the following definitions are hereby
                     inserted in place thereof:

                         "Original Note Amount:  $14,863,206.38"

                         "Construction Note Amount: $2,500,000.00"

                     Any and all references in the Lease Assignment to the term
                     "Note Amount" shall mean and refer jointly to the Original
                     Note Amount and the Construction Note Amount.

              (iii)  The definition of the term "Maturity Date" is hereby
                     deleted in its entirety from the Cover Sheet to the Lease
                     Assignment and the following definitions are hereby
                     inserted in place thereof:

                         "Maturity Date of Original Note:  June 18, 2001"

                         "Maturity Date of Construction Note:  December 31,
                         1997."

                     Any and all references in the Lease Assignment to the term
                     "Maturity Date" shall mean and refer jointly to the
                     Maturity Date of Original Note and the Maturity Date of
                     Construction Note.

              (iii)  The definition of the term "Note" is hereby deleted in its
                     entirety from the Cover Sheet to the Lease Assignment and
                     the following definitions are hereby inserted in place
                     thereof:

                         "Original Note:  that certain Amendment and Restated
                         Promissory Note dated effective as of June 14, 1991
                         made by Assignor in favor of Assignee in the Original
                         Note Amount and all 

                                      -9-
<PAGE>
 
                         replacements, substitutions, modifications, renewals
                         and extensions thereof, which Original Note is payable
                         on the Maturity Date of the Original Note. The Original
                         Note replaces and supersedes in its entirety that
                         certain Promissory Note dated June 14, 1991 made by
                         Assignor in favor of Assignee in the principal amount
                         of $14,863,206.83."

                         "Construction Note:  that certain Promissory Note dated
                         as of January 1, 1995 made by Assignor in favor of
                         Assignee in the Construction Note Amount and all
                         replacements, substitutions, modifications, renewals
                         and extensions thereof, which Construction Note is
                         payable on the Maturity Date of the Construction Note."

                         "Notes:  the Original Note and the Construction Note."

                         Any and all references in the Lease Assignment to the
                         term "Note" shall mean and refer jointly to Notes."

     (b)  Paragraph 1.10 of the Lease Assignment is hereby amended by deleting
          the definition of the term "Loan Documents" in its entirety and
          inserting the following definition in place thereof:

                    "Loan Documents:  the Indenture, the Original Note, the
                     --------------                                        
                    Construction Note, this Lease Assignment, the Construction
                    Loan Agreement, the Security Agreement and any and all other
                    documents or instruments related thereto or to the Secured
                    Debt now or hereafter given by or on behalf of Assignor to
                    Assignee."

     (c)  The following definition is hereby added as Paragraph 1.17 of the
          Lease Assignment:

                    "Loan Agreement:  that certain Construction Loan Agreement
                     --------------                                           
                    by and between Assignor and Assignee dated as of January 1,
                    1995."

     (d)  The following definition is hereby added as Paragraph 1.18 of the
          Lease Assignment:

                                     -10-
<PAGE>
 
                    "Security Agreement:  that certain Security Agreement by and
                     ------------------                                         
                    between Assignor and Assignee dated as of January 1, 1995."

     (e)  Paragraph 6.2 of the Lease Assignment is hereby amended by deleting
          the last grammatical paragraph thereof in its entirety and inserting
          the following in place thereof:

                    "Any sums advanced by Assignee under this Paragraph 6.2
                    shall bear interest at the higher of the interest rates
                    specified in the Notes plus 2% per annum, shall be payable
                    by Assignor on demand, and shall constitute a part of the
                    Secured Debt."

     (f)  Paragraph 7.14 of the Lease Agreement is hereby deleted in its
          entirety and the following new Paragraph 7.14 is hereby inserted in
          place thereof:

                    "Non-Recourse Debt.
                     ----------------- 

                         (a) Assignor shall be liable upon the indebtedness
                    evidenced by the Notes, for all sums to accrue or to become
                    payable thereunder, and for performance of any covenants
                    contained in any of the Loan Documents to the extent, but
                    only the extent, of Assignee's security for the same,
                    including, without limitation, all properties, rights,
                    estates, and interests covered by this Lease Assignment and
                    the Loan Documents.  No attachment, execution or other writ
                    of process shall be sought, issued or levied upon any
                    assets, properties or funds of other than the properties,
                    rights, estates and interest described in this Lease
                    Assignment and the other Loan Documents.  In the event of
                    foreclosure of such title, liens, mortgages or security
                    interests, by private power of sale or otherwise, no
                    judgment for any deficiency upon such indebtedness, sums and
                    amounts shall be sought or obtained by Assignee against
                    Assignor.

                         (b) Subject to the limitations set forth in
                    Subparagraph (a) above, nothing herein contained shall be
                    construed to prevent Assignee from exercising and enforcing
                    any other remedy allowed at law or in equity or by

                                     -11-
<PAGE>
 
                    any statute or by the terms of any of the Loan Documents.

                         (c) Notwithstanding the foregoing provisions of
                    Subparagraphs (a) and (b) above, or of any provision of this
                    Lease Assignment or any other Loan Document to the contrary,
                    no limitation of liability set forth herein, in the
                    Indenture or in any other Loan Document shall be deemed to
                    limit any right Assignee might otherwise have to obtain
                    injunctive relief against Assignor or any partner of
                    Assignor related to the Leasehold Interest or the
                    Improvements or any personal property security or to take
                    any action to preserve, enforce or foreclose the liens,
                    mortgages, assignments and security interests now or at any
                    time hereafter securing the payment and performance of all
                    sums and obligations hereunder or any of the Loan Documents,
                    or to collect rents or to collect amounts which may become
                    owing or payable under or on account of insurance,
                    condemnation awards or damages for other public actions or
                    surety bonds maintained or provided by Assignor.

                         (d) In addition to the foregoing provisions of this
                    Section 7.14, neither the limitation of liability set forth
                    herein, or in the Indenture or any other Loan Document:

                         (i) shall apply to any damages sustained by
                    Assignee by reason of:

                           (A) any misrepresentation by Assignor or any partner
                    of Assignor proving to have been an intentional or
                    fraudulent misrepresentation when made,

                           (B) waste or intentional damage to the Property or
                    Improvements thereon by Assignor or any partner of Assignor,

                           (C) any breach of Assignor's obligations under
                    Section 8.03 of the Loan Agreement,
                    ------------                       

                           (D) the failure of Assignor or any partner of
                    Assignor to pay any income or other taxes, assessments or
                    charges attributable to 

                                     -12-
<PAGE>
 
                    the Assignor or such partner (as the case may be) which can
                    create liens on any portion of the Leasehold Interest or
                    Improvements (to the full extent of any such taxes,
                    assessments or other charges) as to Assignor or the partner
                    who fails to pay such taxes, assessments or charges, or

                           (E) the making of any payment or any distribution
                    (cash, profits, fees or otherwise) of any assets of Assignor
                    to any partner of Assignor or to any affiliate of a partner
                    of Assignor without the prior written consent of Assignee;
                    and

                      (ii) shall apply should Assignor, or any partner of
                    Assignor, claim or contend at any time that the Indenture
                    securing the Loan is, for any reason, invalid or
                    unenforceable to an extent that would:

                           (A) preclude Assignee from foreclosing the Indenture
                    or causing a trustee's sale in connection with the Indenture
                    upon the occurrence of an Event of Default under the
                    Indenture, or

                           (B) preclude Assignee from foreclosing or otherwise
                    enforcing its security interest in the personal property
                    covered by the Indenture or the Security Agreement upon the
                    occurrence of an Event of Default under the Indenture.

                      (e)  Nothing herein contained shall limit or be construed
                    to limit the personal liability and obligations of Assignor
                    in the event that and to the extent that after an Event of
                    Default or an event or circumstance that with the passage of
                    time, the giving of notice, or both, could constitute an
                    Event of Default, Assignor collects any rents, issues or
                    profits of the Leasehold Interest or the Improvements or
                    derived from the Leasehold Interest or the Improvements and
                    does not apply the same to the normal operating expenses of
                    the Leasehold Interest or the Improvements or any payments
                    due under any of the Loan Documents, it being intended
                    hereby that Assignor shall be personally liable and


                                     -13-
<PAGE>
 
                    obligated hereunder to the full extent of such rentals and
                    other items so collected and not so applied, and that
                    Assignee or other holder hereof or of either of the Notes or
                    any of the Loan Documents shall not be limited in any way in
                    enforcing such personal liability and obligations of
                    Assignor."


     3.   Affirmation of Lien; Full Force and Effect.  Except as amended by this
          ------------------------------------------                            
Amendment, the Indenture and the Lease Assignment shall remain unmodified and in
full force and effect.  The parties hereto hereby ratify and confirm the
Indenture and the Lease Assignment, as amended herein.  Without limitation of
the foregoing, Trustor hereby certifies that (i) the representations and
warranties of Trustor set forth in Section 3 of the Indenture and Paragraph 3 of
                                   ---------                      -----------   
the Lease Assignment are true, correct and complete in all material respects on
and as of the date hereof as though made on and as of the date hereof; and (ii)
Trustor has performed and complied with, in all material respects, all
agreements, covenants and obligations required to be performed by Trustor under
the Indenture and the Lease Assignment prior to the date hereof.

     4.   References to Indenture and Lease Assignment.  All references to the
          --------------------------------------------                        
Indenture and the Lease Assignment in the Loan Documents shall be deemed to
refer to the Indenture and the Lease Assignment, respectively, as amended by
this Amendment.

     5.   Counterparts.  This Amendment may be executed in any number of
          ------------                                                  
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

     6.   Governing Law.  This Amendment shall be governed by and construed in
          -------------                                                       
accordance with the laws of the State of California.

     7.   Conflict.  In the event of any inconsistencies between the provisions
          --------                                                             
of this Amendment and the provisions of the Indenture and/or the Lease
Assignment, as applicable, the provisions of this Amendment shall govern and
prevail.

                                     -14-
<PAGE>
 
     IN WITNESS WHEREOF, Trustor and Beneficiary have executed this Amendment as
of the date first above written.

     "Trustor"                WILLOWS CONCORD VENTURE, a
                              California limited partnership



                              By: /s/ John S. Hagestad
                                  -------------------------
                                      John S. Hagestad
                                      Its:  General Partner


                              By: /s/ Carl F. Willgeroth
                                  -------------------------
                                      Carl F. Willgeroth
                                      Its:  General Partner


                              By: /s/ William J. Thormahlen
                                  -------------------------
                                      William J. Thormahlen
                                      Its:  General Partner


                                     -15-
<PAGE>
 
     "Beneficiary"            NEW ENGLAND LIFE PENSION PROPERTIES;
                              A REAL ESTATE LIMITED PARTNERSHIP, a
                              Massachusetts limited partnership

                              By:  Copley Properties Company, 
                                   Inc., a Massachusetts 
                                   corporation, General Partner


                              By: [SIGNATURE APPEARS HERE]
                                  ---------------------------------
                              Name: Wesley M. Gardiner
                                    -------------------------------
                              Title: Vice President
                                     ------------------------------

                              By: [SIGNATURE APPEARS HERE]
                                  ---------------------------------
                              Name:[SIGNATURE APPEARS HERE]
                                   --------------------------------
                              Title: Investment Officer
                                     ------------------------------


                              NEW ENGLAND LIFE PENSION PROPERTIES 
                              II; A REAL ESTATE LIMITED 
                              PARTNERSHIP, a Massachusetts limited 
                              partnership

                              By:  Copley Properties Company II, 
                                   Inc., a Massachusetts 
                                   corporation, General Partner


                              By: [SIGNATURE APPEARS HERE]
                                  ----------------------------------

                              Name: Wesley M. Gardiner
                                    --------------------------------
                              Title: Vice President
                                     -------------------------------

                              By: [SIGNATURE APPEARS HERE]
                                  ----------------------------------
                              Name: [SIGNATURE APPEARS HERE]
                                    --------------------------------
                              Title: Investment Officer
                                     -------------------------------

                                     -16-
<PAGE>
 
ACKNOWLEDGMENT FOR WILLOWS CONCORD VENTURE
------------------------------------------


STATE OF CALIFORNIA      )
                         )    ss.
COUNTY OF ORANGE         )

     On 10-18-95, before me, Cheryl A. Hyatt, a Notary Public in and 
for said state, personally appeared John S. Hagestad, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacity, and that by his signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.

     WITNESS my hand and official seal.

                              /s/ Cheryl A. Hyatt
                              -------------------------------------
                              Notary Public in and for said State

[SEAL APPEARS HERE]


ACKNOWLEDGMENT FOR WILLOWS CONCORD VENTURE
------------------------------------------


STATE OF CALIFORNIA      )
                         )    ss.
COUNTY OF ORANGE         )


     On 10-18-95, before me, Cheryl A. Hyatt, a Notary Public in and for
said state, personally appeared Carl F. Willgeroth, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacity, and that by his signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.

     WITNESS my hand and official seal.


                              /s/ Cheryl A. Hyatt
                              -------------------------------------
                              Notary Public in and for said State


[SEAL APPEARS HERE]

                                     -17-
<PAGE>
 
ACKNOWLEDGMENT FOR WILLOWS CONCORD VENTURE
------------------------------------------


STATE OF CALIFORNIA      )
                         )    ss.
COUNTY OF ORANGE         )


     On 10-18-95, before me, Cheryl A. Hyatt, a Notary Public in and for
said state, personally appeared William J. Thormahlen, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.

     WITNESS my hand and official seal.


                              /s/ Cheryl A. Hyatt 
                              -------------------------------------
                              Notary Public in and for said State

[SEAL APPEARS HERE]

                                     -18-
<PAGE>
 
COMMONWEALTH OF MASSACHUSETTS )
                              )     ss.
COUNTY OF SUFFOLK             )


     On this 1 day of November, 1995, before me, the undersigned, a Notary
Public in and for said State, personally appeared Wes Gardiner and Marie 
Stewart, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the Vice President AND Investment Officer OF COPLEY PROPERTIES
COMPANY, INC., a Massachusetts corporation, the corporation that executed the
within instrument on behalf of NEW ENGLAND LIFE PENSION PROPERTIES; A REAL
ESTATE LIMITED PARTNERSHIP, a Massachusetts limited partnership, the partnership
therein named, pursuant to its bylaws or resolution of its board of directors,
and acknowledged to me that Copley Properties Company, Inc., executed the within
instrument on behalf of New England Life Pension Properties; A Real Estate
Limited Partnership as its free act and deed.


[SEAL APPEARS HERE]                  /s/ Karyn E. Bates
                                     -------------------------------
                                     Notary Public in and for
                                     the Commonwealth of Massachusetts


COMMONWEALTH OF MASSACHUSETTS )
                              )     ss.
COUNTY OF SUFFOLK             )


     On this 1 day of November, 1995, before me, the undersigned, a Notary
Public in and for said State, personally appeared Wes Gardiner and Marie
Stewart, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the Vice President AND Investment Officer OF COPLEY PROPERTIES
COMPANY II, INC., a Massachusetts corporation, the corporation that executed the
within instrument on behalf of NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL
ESTATE LIMITED PARTNERSHIP, a Massachusetts limited partnership, the partnership
therein named, pursuant to its bylaws or resolution of its board of directors,
and acknowledged to me that Copley Properties Company II, Inc., executed the
within instrument on behalf of New England Life Pension Properties II; A Real
Estate Limited Partnership as its free act and deed.


[SEAL APPEARS HERE]                  /s/ Karyn E. Bates
                                     -------------------------------
                                     Notary Public in and for
                                     the Commonwealth of Massachusetts

                                     -19-
<PAGE>
 
                                   EXHIBIT A
                                   ---------

                               LEGAL DESCRIPTION
                               -----------------

     That certain real property located in the City of Concord, County of Contra
Costa, State of California, described as follows:

          Parcel "B" as shown on the Parcel Map filed April 22, 1969, in Book 8
     of Parcel Maps at Page 16, Contra Costa County Records (hereinafter, the
     "Site").

          Excepting therefrom the interest to Contra Costa County Flood Control
     and Water Conservation District, in the Deed recorded May 16, 1969, in Book
     5876, Page 838, of Official Records.

     ALSO EXCEPTING THEREFROM the buildings, structures and improvements now or
     hereafter erected on the Site, and any replacements thereof, which are and
     shall remain real property (collectively, the "Improvements"), and the
     furnishings, equipment, machinery and other items of personal property now
     or hereafter necessary for the property operation and maintenance of the
     Improvements and situated on, over or beneath the Site.
<PAGE>
 
                   FIRST AMENDMENT TO AMENDED AND COMPLETELY
                   -----------------------------------------
                             RESTATED GROUND LEASE
                             ---------------------


          This First Amendment to Amended and Completely Restated Ground Lease
(this "Amendment") is made and entered into as of the 1st day of January, 1995,
by and between NEW ENGLAND LIFE PENSION PROPERTIES; A REAL ESTATE LIMITED
PARTNERSHIP, NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE LIMITED
PARTNERSHIP (jointly, the "Landlord"), whose address is c/o Copley Real Estate
Advisors, Inc., 399 Boylston Street, Boston, MA  02116, and WILLOWS CONCORD
VENTURE, a California limited partnership (the "Tenant"), whose address is 18802
Bardeen Avenue, Irvine California  92715-1521, who, for and in consideration of
the sum of Ten Dollars ($10.00) each to the other paid, and the mutual covenants
flowing between the parties hereto, the receipt and sufficiency of which are
hereby acknowledged, do hereby covenant, warrant and agree as follows:

          1. Recitals. This Amendment is made with reference to the following
             --------
facts and objectives:

          a.  Landlord and Tenant entered into a certain written Amended and
Completely Restated Ground Lease dated as of June 18, 1991 (the "Lease"),
pursuant to which Landlord leased to Tenant and Tenant leased from Landlord,
certain premises more particularly described therein (the "Premises").

          b.  The parties hereto desire to amend the Lease on the effective date
hereof on the terms and conditions set forth herein.

          2.  Representations.  As an inducement to Landlord to enter into this
              ---------------                                                  
Amendment, Tenant represents that (a) Tenant has not made any assignment,
sublease, transfer, conveyance or other disposition of said lease or any
interest thereof; and that there exists no claim, demand, obligation, liability,
action or cause of action arising from said Lease; and (b) there are no liens
for past due taxes of any nature (except any lien for unpaid city, state and
county 1995 ad valorem taxes on said Premises), paving, sidewalk, curbing,
sewer, or any other street improvements of any kind against or affecting said
Premises.

          3.  Amendment of Lease.
              ------------------
a.  Sections 16.08(b), 16.08(c) and 16.09 are hereby deleted in their entirety
from the Amended Lease, and the following new section 16.08(b) is hereby
substituted in their place:
<PAGE>
 
          "16.08(b) On or after January 1, 1996, Landlord may at its sole
          discretion offer the entire Property (Landlord's Estate together with
          Tenant's Estate) for sale for such price and on such other terms and
          conditions as the Landlord may determine in its sole discretion. In
          connection with any such sale or proposed sale, the Landlord shall
          have the right to cause the Property to be marketed to such
          prospective purchasers and upon such terms as the Landlord shall
          determine in its sole discretion and to take such other actions as it
          deems necessary or appropriate in connection with such sale or
          proposed sale. The Tenant agrees, at the direction of the Landlord, to
          execute and deliver such documents, including without limitation
          purchase and sale agreements, deeds or assignments of lease, as may be
          reasonably required in connection with any such sale or proposed sale;
          provided, however, that Landlord shall use commercially reasonable
          efforts to cause such documents to provide that the partners of Tenant
          will have no recourse liability pursuant to such documents."

          b.  Section 16.10 of the Amended Lease is hereby amended by adding the
following language at the end thereof:

          "Notwithstanding the foregoing, Landlord shall not unreasonably
          withhold or delay its consent to any (i) distribution to any general
          or limited partner of Tenant of such partner's respective interest
          therein or (ii) assignment or transfer by any general or limited
          partner of Tenant of its respective interest so distributed to any
          person or entity controlling, controlled by, or under common control
          with such general or limited partner (each an "Affiliate"), provided
          that (A) such distribution, assignment or transfer is made for the
          purpose of accomplishing a tax free exchange under Section 1031 of the
          Internal Revenue Code of 1986, as amended, and (B) any and all such
          Affiliates agree to assume all of the liabilities and obligations of
          Tenant and such general or limited partner to Landlord pursuant to a
          written instrument satisfactory to Landlord."

          4.  Effective Date. The effective date of this Amendment shall be the
              --------------
date first above written.

          5.  Successors.  This Amendment shall be binding on and inure to the
              ----------                                                      
benefit of the parties hereto and their heirs, successors and assigns.

                                      -2-
<PAGE>
 
          6.  No Other Modification.  Except as specifically amended by this
              ---------------------                                         
Amendment, no other provision of the Lease is hereby modified, and the Lease
shall remain in full force and effect.

          IN WITNESS WHEREOF, the parties hereto have executed this Amended as a
sealed instrument on the date first above written.

                                          LANDLORD:

                                          NEW ENGLAND LIFE PENSION PROPERTIES; 
                                          A REAL ESTATE LIMITED PARTNERSHIP

                                          By:  Copley Properties Company, 
                                               Inc., General Partner



                                               By: /s/ Wesley M. Gardiner
                                                   -----------------------------
                                                   Name: Wesley M. Gardiner
                                                   Title: Vice President


                                          NEW ENGLAND LIFE PENSION PROPERTIES 
                                          II; A REAL ESTATE LIMITED 
                                          PARTNERSHIP

                                          By:  Copley Properties Company II, 
                                               Inc., General Partner



                                               By: /s/ Wesley M. Gardiner
                                                   -----------------------------
                                                   Name: Wesley M. Gardiner
                                                   Title: Vice President



                                          TENANT:

                                          WILLOWS CONCORD VENTURE



                                          By: /s/ William J. Thormahlen
                                              ----------------------------------
                                              Name: WILLIAM J. THORMAHLEN
                                              Title: GENERAL PARTNER


                                      -3-